# Negative Correlation

## What is 'Negative Correlation'

Negative correlation is 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.

Next Up

## BREAKING DOWN '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.

RELATED TERMS
1. ### Positive Correlation

A relationship between two variables in which both variables ...
2. ### Correlation Coefficient

A measure that determines the degree to which two variable's ...
3. ### Inverse Correlation

A contrary relationship between two variables such that they ...
4. ### Serial Correlation

The relationship between a given variable and itself over various ...
5. ### Cluster Analysis

An investment approach that places securities into groups based ...
6. ### Benchmark For Correlation Values

A benchmark or point of reference chosen by an investment fund ...
Related Articles

### Correlation

In the world of finance, correlation is a statistical measure of how two securities move in relation to each other.
2. Managing Wealth

### 4 Reasons Why Market Correlation Matters

Learn about how correlation can be used to measure how broader markets move in relation to each other. See how correlation is used to manage risk.
3. Investing

Correlation is a term from linear regression analysis that describes the strength of the relationship between a dependent variable and an independent variable. Central to pairs trading is the ...
4. Markets

### Understanding the Oil & Gas Price Correlation

Learn how the correlation between the commodity prices for natural gas and oil changed from 2004 to 2015 due to increased natural gas production.

### What's the Correlation Coefficient?

The correlation coefficient is a measure of how closely two variables move in relation to one another. If one variable goes up by a certain amount, the correlation coefficient indicates which ...

### Explaining Autocorrelation

Autocorrelation is the measure of an internal correlation with a given time series.
7. Managing Wealth

### Diversification: Protecting Portfolios From Mass Destruction

This investing strategy retains its charm as a protection against random events in the market.

### Managing Currency Exposure In Your Portfolio

The value of your investments is impacted by changes in global currency exchange rates. Find out how.
9. Markets

### Understanding Regression

Regression is a statistical analysis that attempts to predict the effect of one or more variables on another variable.
10. ETFs & Mutual Funds

### How I Learned to Stop Worrying and Love the Bond

Though U.S. Treasuries are not as expensive as government bonds, U.S. bonds are offering a relatively paltry real return, even after adjusting for low inflation.
RELATED FAQS
1. ### 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 >>
2. ### 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 >>

4. ### 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 >>
5. ### What is the difference between positive correlation and inverse correlation?

Learn the difference between a positive correlation and a negative, or inverse, correlation and the way they apply to the ... Read Answer >>
6. ### 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 >>
Hot Definitions
1. ### Frexit

Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
2. ### AAA

The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
3. ### GBP

The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
4. ### Diversification

A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
5. ### European Union - EU

A group of European countries that participates in the world economy as one economic unit and operates under one official ...
6. ### Sell-Off

The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...