Pearson Coefficient

Definition of 'Pearson Coefficient'


A type of correlation coefficient that represents the relationship between two variables that are measured on the same interval or ratio scale.

Investopedia explains 'Pearson Coefficient'


Numerically, the Pearson coefficient is represented the same way as a correlation coefficient that is used in linear regression; ranging from -1 to +1. A value of +1 is the result of a perfect positive relationship between two or more variables. Conversely, a value of -1 represents a perfect negative relationship. It has been shown that the Pearson coefficient can be deceptively small when it is used with a non-linear equation.


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