The correlation coefficient measures the robustness of the relationship between two variables. Pearson's correlation coefficient is one of the most commonly used correlation coefficients and measures the linear relationship between two variables. The value of the correlation coefficient, denoted as r, ranges from 1 to +1, which gives the strength of the relationship and whether the relationship is negative or positive. When the value of r is greater than zero, it is a positive relationship; when the value is less than zero, it is a negative relationship. A value of zero indicates that there is no relationship between the two variables.
If the correlation coefficient of two variables is zero, it signifies that there is no linear relationship between the variables. However, this is only for a linear relationship; it is possible that the variables have a strong curvilinear relationship. When the value of r is close to zero, generally between 0.1 and +0.1, the variables are said to have no linear relationship or a very weak linear relationship. For example, suppose the prices of coffee and of computers are observed and found to have a correlation of +.0008,; this means that there is no correlation, or relationship, between the two variables.
A positive correlation, when r is greater than 0, signifies that both variables move in the same direction. When r is +1, it signifies that the two variables being compared have a perfect positive relationship; when one variable moves higher or lower, the other variable moves in the same direction with the same magnitude. The closer the value of r is to +1, the stronger the linear relationship. For example, suppose the value of oil prices are directly related to the prices of airplane tickets, with a correlation coefficient of +0.8. The relationship between oil prices and airfares has a very strong positive correlation since the value is close to +1. So if the price of oil decreases, airfares follow in tandem. If the price of oil increases, so does the prices of airplane tickets.
A negative correlation, when r is less than 0, indicates that both variables move in the opposite direction. When r is 1, the relationship is said to be perfectly negative correlated; in short, if one variable increases, the other variable decreases with the same magnitude, and vice versa. For example, suppose a study is conducted to assess the relationship between outside temperature and heating bills. The study concludes that there is a negative correlation between the prices of heating bills and the outdoor temperature. The correlation coefficient is calculated to be 0.96. This strong negative correlation signifies that as the temperature decreases outside, the prices of heating bills increase and vice versa.
Do you know why correlation matters for investing? Read 4 Reasons why Market Correlation Matters.

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 is the correlation between American stock prices and the value of the U.S. dollar?
The correlation between any two variables (or sets of variables) summarizes a relationship, whether or not there is any realworld ... Read Answer >> 
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 >> 
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 >> 
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 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 >>

Investing
Correlation
In the world of finance, correlation is a statistical measure of how two securities move in relation to each other. 
Investing
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. 
Financial Advisor
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. 
Investing
How To Trade Currency And Commodity Correlations
Relationships between currencies and commodities exist throughout the financial markets. Find out how to trade these trends. 
Trading
Using Currency Correlations To Your Advantage
Knowing the relationships between pairs can help control risk exposure and maximize profits. 
Investing
Commodities: The Portfolio Hedge
These diverse asset classes can provide downside protection and upside potential. Find out how to use them. 
Investing
Tales From The Trenches: Perfectly Negative Profitability
Use correlations to profit when two specific instruments move in opposite directions. 
Investing
Explaining Autocorrelation
Autocorrelation is the measure of an internal correlation with a given time series. 
Investing
Calculating the Coefficient Of Variation (CV)
Coefficient of variation measures the dispersion of data points around the mean, a statistical average.

Correlation Coefficient
A measure that determines the degree to which two variable's ... 
Pearson Coefficient
A type of correlation coefficient that represents the relationship ... 
Positive Correlation
A relationship between two variables in which both variables ... 
Negative Correlation
In statistics, a perfect negative correlation is a relationship ... 
Benchmark For Correlation Values
A benchmark or point of reference chosen by an investment fund ... 
Multiple Linear Regression  MLR
Multiple linear regression (MLR) is a statistical technique that ...