Investor Glossary-correlationInvestor Glossary-correlationInvestor Glossary-correlationInvestor Glossary-correlationInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Correlation

The HTML to link to this page
 

In statistics, correlation is an assessment of the extent of linear relationship between two variables. A correlation coefficient is the index of the extent of the linear relationship. The most common correlation coefficient is the Pearson product-moment correlation, defined as the covariance of the two variables divided by the product of their standard deviations. The Pearson correlation coefficient is always between -1 and 1. The weaker the relationship, the closer the correlation coefficient is to 0. A positive correlation coefficient indicates a higher value for one variable tends to correspond to a higher value for the other, and a negative correlation coefficient indicates a higher value for one variable tends to correspond to a lower value for the other. Correlation is not an appropriate statistical technique for categorical data such as gender or color. In contrast, correlation is an extremely useful technique for prices. Correlation of stock prices is a simple yet informative analysis. If two stocks have a high correlation, their prices tend to rise and fall in sync.



Rate this correlation definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: average price per share, annual return, irrevocable trust, ex-dividend, inflation, open position, Zero Cost Collar, stock split, quality assurance, Key Rate Duration, deferred revenue, APR, reverse mortgage, minority interest, phantom income, debt service coverage, option premium, real GDP, LIBOR, balance sheet, 1035 exchange, diluted share, ex-dividend date, 144a, command economy, class C shares, cancelled check, in escrow, VIX, covered put, per diem, labor relations, required rate of return, FTSE, wholly-owned subsidiary, FICO score, limit order, implied volatility, dividends payable, liquidity ratio, retained earnings, EBITDA, deferred tax, stock market close, margin rate, current ratio, 401a, risk management, 1031 exchange


Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use