Principal component analysis (PCA) and index construction

[wolly77]

Dear guys, I have this problem. I am using PCA for building a sort of leading indicator index using a large dataset. I know that PCA doesn't care about correlation sign. But I think it matters for the correctness of the sign of the component extracted. If my target is to build an economic indicator, I suppose that all the variables have to be positively correlated before extracting the component. Thank you

[EViews Glenn]

There is no reason to require positive correlation.