Difference between revisions of "Correlation coefficient"
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| − | + | [[Correlation coefficient]], ''ρ (rho)'', is a standardized measure of how two random variables co-vary. A correlation coefficient (ρ) of +1.0 means that the two variables move up and down in perfect synchronization, whereas a coefficient of −1.0 means the variables always move in opposite directions. A correlation coefficient of zero suggests that the two variables are not related to one another; that is, they are independent. | |
==Definitions== | ==Definitions== | ||
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | ||
| − | : | + | :[[Correlation coefficient]], ''ρ (rho)''. A standardized measure of how two random variables co-vary. A correlation coefficient (ρ) of +1.0 means that the two variables move up and down in perfect synchronization, whereas a coefficient of −1.0 means the variables always move in opposite directions. A correlation coefficient of zero suggests that the two variables are not related to one another; that is, they are independent. |
| + | According to [[Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition)]], | ||
| + | :[[Correlation coefficient]], ''r''. A measure of the degree of relationship between two variables. | ||
==Related concepts== | ==Related concepts== | ||
Latest revision as of 23:49, 1 November 2019
Correlation coefficient, ρ (rho), is a standardized measure of how two random variables co-vary. A correlation coefficient (ρ) of +1.0 means that the two variables move up and down in perfect synchronization, whereas a coefficient of −1.0 means the variables always move in opposite directions. A correlation coefficient of zero suggests that the two variables are not related to one another; that is, they are independent.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Correlation coefficient, ρ (rho). A standardized measure of how two random variables co-vary. A correlation coefficient (ρ) of +1.0 means that the two variables move up and down in perfect synchronization, whereas a coefficient of −1.0 means the variables always move in opposite directions. A correlation coefficient of zero suggests that the two variables are not related to one another; that is, they are independent.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Correlation coefficient, r. A measure of the degree of relationship between two variables.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
