Negative Correlation

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DEFINITION of 'Negative Correlation'

A relationship between two variables in which one variable increases as the other decreases, and vice versa. In statistics, a perfect negative correlation is represented by the value -1.00, while a 0.00 indicates no correlation and a +1.00 indicates a perfect positive correlation. A perfect negative correlation means that the relationship that appears to exist between two variables is negative 100% of the time. It is also possible that two variables may be negatively correlated in some, but not all, cases.

INVESTOPEDIA EXPLAINS 'Negative Correlation'

Here are a few examples of a negative correlation: The more time I spend at the mall, the less money I have in my checking account. The higher my mutual fund's expense ratio, the lower my investment returns. The more hours I spend at the office, the less time I spend with my family.

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  4. Does a negative correlation between two stocks mean anything?

    Negative correlation with regard to stocks means two individual stocks have a statistical relationship such that they generally ... Read Full Answer >>
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    The law of demand is an economic principle that explains the negative correlation between the price of a good or service ... Read Full Answer >>
  6. What does it mean if the correlation coefficient is positive, negative, or zero?

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  7. Are oil prices and interest rates correlated?

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