Correlation Coefficient

AAA

DEFINITION of 'Correlation Coefficient'

A measure that determines the degree to which two variable's movements are associated.

The correlation coefficient is calculated as:

Correlation Coefficient

INVESTOPEDIA EXPLAINS 'Correlation Coefficient'

The correlation coefficient will vary from -1 to +1. A -1 indicates perfect negative correlation, and +1 indicates perfect positive correlation.

RELATED TERMS
  1. Covariance

    A measure of the degree to which returns on two risky assets ...
  2. Coefficient Of Variation - CV

    A statistical measure of the dispersion of data points in a data ...
  3. Autocorrelation

    A mathematical representation of the degree of similarity between ...
  4. Pearson Coefficient

    A type of correlation coefficient that represents the relationship ...
  5. Copula

    A statistical measure that represents a multivariate uniform ...
  6. Statistically Significant

    The likelihood that a result or relationship is caused by something ...
Related Articles
  1. Diversification: Protecting Portfolios ...
    Investing Basics

    Diversification: Protecting Portfolios ...

  2. Microsoft Excel Features For The Financially ...
    Professionals

    Microsoft Excel Features For The Financially ...

  3. What is the correlation between American ...
    Forex

    What is the correlation between American ...

  4. Using Currency Correlations To Your ...
    Forex Education

    Using Currency Correlations To Your ...

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center