Inferring the combinatorial regulatory code of transcription factors (TFs) from 
genome-wide TF binding profiles is challenging. A major reason is that TF 
binding profiles significantly overlap and are therefore highly correlated. 
Clustered occurrence of multiple TFs at genomic sites may arise from chromatin 
accessibility and local cooperation between TFs, or binding sites may simply 
appear clustered if the profiles are generated from diverse cell populations. 
Overlaps in TF binding profiles may also result from measurements taken at 
closely related time intervals. It is thus of great interest to distinguish TFs 
that directly regulate gene expression from those that are indirectly associated 
with gene expression. Graphical models, in particular Bayesian networks, provide 
a powerful mathematical framework to infer different types of dependencies. 
However, existing methods do not perform well when the features (here: TF 
binding profiles) are highly correlated, when their association with the 
biological outcome is weak, and when the sample size is small. Here, we develop 
a novel computational method, the Neighbourhood Consistent PC (NCPC) algorithms, 
which deal with these scenarios much more effectively than existing methods do. 
We further present a novel graphical representation, the Direct Dependence Graph 
(DDGraph), to better display the complex interactions among variables. NCPC and 
DDGraph can also be applied to other problems involving highly correlated 
biological features. Both methods are implemented in the R package ddgraph, 
available as part of Bioconductor 
(http://bioconductor.org/packages/2.11/bioc/html/ddgraph.html). Applied to real 
data, our method identified TFs that specify different classes of cis-regulatory 
modules (CRMs) in Drosophila mesoderm differentiation. Our analysis also found 
depletion of the early transcription factor Twist binding at the CRMs regulating 
expression in visceral and somatic muscle cells at later stages, which suggests 
a CRM-specific repression mechanism that so far has not been characterised for 
this class of mesodermal CRMs.