Durbin Watson is a test of autocorrelation:
Where r is the auto-correlation coefficient (between Yt and Yt-1).
And Since -1 £ r £ 1
• Conditions which Must be Fulfilled for DW to be a Valid Test
• 1. Constant term in regression
• 2. Regressors are non-stochastic
• 3. No lags of dependent variable