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.

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Investing
Correlation
In the world of finance, correlation is a statistical measure of how two securities move in relation to each other. 
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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?
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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 >>