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The strength of the linear relationship between two numerical variables may be measured by the coefficient of correlation
What is meant by coefficient of correlation?
The correlation coefficient is a statistical indicator of how strongly two variables are linearly related. Its values may be between -1 and 1. A correlation coefficient of -1 indicates a complete negative, inverse, or inverse-correlation, where values in one series increase as those in the other fall and vice versa. A coefficient of 1 denotes a perfect positive correlation or a straight line. A correlation value of 0 indicates that there is no linear relationship.
In both science and finance, correlation coefficients are used to measure the degree of relationship between two variables, components, or data sets. For example, because high oil prices benefit crude producers, one might assume that the correlation between oil prices and forward returns on oil stocks is strongly positive.
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