What is 'Correlation'
Correlation, in the world of finance, is a statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management.
BREAKING DOWN 'Correlation'
Correlation is computed into what is known as the correlation coefficient, which ranges between 1 and +1. Perfect positive correlation (a correlation coefficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random.
In real life, perfectly correlated securities are rare, rather you will find securities with some degree of correlation.

Inverse Correlation
A contrary relationship between two variables such that they ... 
Negative Correlation
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Positive Correlation
A relationship between two variables in which both variables ... 
Benchmark For Correlation Values
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Correlation Coefficient
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Cluster Analysis
An investment approach that places securities into groups based ...

Investing
Correlation
In the world of finance, correlation is a statistical measure of how two securities move in relation to each other. 
Products and Investments
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Trading Strategies
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Economics
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Active Trading
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Investing Basics
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This investing strategy retains its charm as a protection against random events in the market. 
Technical Indicators
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Investing Basics
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If you think holding several stocks means you're diversified, think again  there's much more to be done to reduce portfolio risk. 
Trading Strategies
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Forex Education
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How do I find positive correlation in the stock market?
Learn how positive correlation is found in the stock market, how correlation is calculated and how positive correlation is ... Read Answer >> 
How does correlation affect the stock market?
Learn about the role correlation plays in prudent stock market investing, and how the correlation coefficient is used to ... Read Answer >> 
Does a negative correlation between two stocks mean anything?
Learn what the concept of negative correlation means, understand how it is generally calculated and see how it is used in ... Read Answer >> 
What is the difference between a copay and a deductible?
Learn how the correlation coefficient may be used to predict the relationship between the returns of two stocks, but also ... Read Answer >> 
How do I calculate correlation between market indicators and specific stocks?
Discover how to calculate the correlation coefficient between market indicators and stock prices, a critical skill in technical ... Read Answer >> 
How can you calculate correlation using Excel?
Find out how to calculate the Pearson correlation coefficient between two data arrays in Microsoft Excel through the CORREL ... Read Answer >>