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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RELATED FAQS
  1. Can the correlation coefficient be used to measure dependence?

    Understand the coefficient of correlation and its use in determining the relationship between two variables through the concepts ... Read Answer >>
  2. What does it mean if the correlation coefficient is positive, negative, or zero?

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  4. Which of the following statements is (are) true with respect to the coefficient ...

    The correct answer is: c) (I) is incorrect because coefficient of determination will always be positive, whereas correlation ... Read Answer >>
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