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.
Next Up
BREAKING DOWN '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 nonlinear equation.
RELATED TERMS

Inverse Correlation
A contrary relationship between two variables such that they ... 
Coefficient Of Variation  CV
A statistical measure of the dispersion of data points in a data ... 
Excess Kurtosis
A statistical term describing that a probability, or return distribution, ... 
Negative Correlation
A relationship between two variables in which one variable increases ... 
Linear Relationship
A statistical term used to describe the directly proportional ... 
Gini Index
A measurement of the income distribution of a country's residents. ...
Related Articles

Fundamental Analysis
Calculating the Coefficient Of Variation (CV)
Coefficient of variation measures the dispersion of data points around the mean, a statistical average. 
Investing
Correlation
In the world of finance, correlation is a statistical measure of how two securities move in relation to each other. 
Trading Strategies
Is the Stock Correlation Strategy Effective?
The synchronized movement among stocks and markets in recent years is challenging diversification. 
Stock Analysis
Financial Times Sold to Japanese Media Group (PSO)
Capping months, if not years, of speculation about its fate, the Financial Times has been sold to a new owner. The newspaper's longtime owner, PearsonÂ , has signed an agreement to sell it to ... 
Stock Analysis
Valeant News: Michael Pearson's Return, Sort of
Explore the circumstances surrounding Michael Pearsonâ€™s leave of absence from Valeant, as well as the details of his shortlived return. 
Economics
Understanding Regression
Regression is a statistical analysis that attempts to predict the effect of one or more variables on another variable. 
Trading Strategies
Pairs Trade Example
As with nearly any investment, taking a pairs trade involves more than just hitting the buy and sell button. Here we examine, in very broad terms, the steps required to enter and exit a pairs ... 
Products and Investments
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. 
Stock Analysis
Pearson in Talks to Sell 50% of The Economist (PSO)
Pearson (NYSE: PSO) has disclosed that it is in talks to sell its 50% stake in the current affairs and business weekly magazine The Economist. In a tersely worded statement, the company wrote ... 
Economics
What Does a Relationship Manager Do?
A firmâ€™s relationship manager works to maintain positive relationships with its customers and partner firms.
RELATED FAQS

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 >> 
What does a negative correlation coefficient mean?
Discover the meaning of a negative correlation coefficient, how this compares to other correlation coefficients and examples ... Read Answer >> 
What is the difference between a copay and a deductible?
Learn how the correlation coefficient may be used to predict the relationship between the returns of two stocks, but also ... Read Answer >> 
How can I use a regression to see the correlation between prices and interest rates?
Learn how to use linear regression to calculate the correlation between stock prices and interest rates by taking the square ... Read Answer >> 
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 >> 
How does the risk of investing in the Internet sector compare to the broader market?
Learn how the risk of investing in the Internet sector compares to the broader market and what steps investors take to mitigate ... Read Answer >>