Positive Correlation


DEFINITION of 'Positive Correlation '

A relationship between two variables in which both variables move in tandem. A positive correlation exists when as one variable decreases, the other variable also decreases and vice versa. In statistics, a perfect positive correlation is represented by the value +1.00, while a 0.00 indicates no correlation and a -1.00 indicates a perfect negative correlation.


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BREAKING DOWN 'Positive Correlation '

Here are a few simple examples of a positive correlation: The more money I save, the more financially secure I feel. The longer I invest, the more compound interest I earn. The less time I spend marketing my business, the fewer new clients I acquire. The more years of education I complete, the higher my earning potential.

A perfect positive correlation means that 100% of the time, the relationship that appears to exist between two variables is positive. It is also possible for two variables to be positively correlated in some, but not all, cases.

  1. Inverse Correlation

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  2. Negative Correlation

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  3. Correlation Coefficient

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  4. Correlation

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  5. Covariance

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