Information Coefficient - IC


DEFINITION of 'Information Coefficient - IC'

A correlation value that measures the relationship between a variable's predicted and actual values. The information coefficient is a performance measure used for evaluating the forecasting skill of financial analysts

BREAKING DOWN 'Information Coefficient - IC'

The information coefficient follows the same measurement rules of correlation. Scoring ranges on a scale from 0 to +1, where the latter shows a strong linear relationship between the predicted and actual values. Analysts with an IC score near +1 exhibit great skill in forecasting. A score close to 0 reveals that the analyst is a poor forecaster.

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