Financial Terms coefficient of correlation

# Definition of coefficient of correlation

## coefficient of correlation

a measure of dispersion that indicates the degree of relative association existing between two variables

# Related Terms:

## Correlation coefficient

A standardized statistical measure of the dependence of two random variables,
defined as the covariance divided by the standard deviations of two variables.

## Correlation Coefficient

A measure of the tendency of two variables to change values
together

## Correlation coefficient

A statistic in which the covariance is scaled to a
value between minus one (perfect negative correlation) and plus one (perfect
positive correlation).

## Autocorrelation

The correlation of a variable with itself over successive time intervals.

## Coefficient of determination

A measure of the goodness of fit of the relationship between the dependent and
independent variables in a regression analysis; for instance, the percentage of variation in the return of an
asset explained by the market portfolio return.

## Correlation

See: correlation coefficient.

## Information Coefficient (IC)

The correlation between predicted and actual stock returns, sometimes used to
measure the value of a financial analyst. An IC of 1.0 indicates a perfect linear relationship between predicted
and actual returns, while an IC of 0.0 indicates no linear relationship.

## coefficient of determination

a measure of dispersion that
indicates the â€śgoodness of fitâ€ť of the actual observations
to the least squares regression line; indicates what proportion
of the total variation in y is explained by the regression model

## coefficient of variation

a measure of risk used when the standard deviations for multiple projects are approximately
the same but the expected values are significantly different

## correlation analysis

an analytical technique that uses statistical
measures of dispersion to reveal the strength of the
relationship between variables

## input-output coefficient

a number (prefaced as a multiplier
to an unknown variable) that indicates the rate at which each
decision variable uses up (or depletes) the scarce resource

## Correlation

The simultaneous change in value of two random numeric variables.

## Beta coefficient

A measurement of the extent to which the returns on a given stock move with stock market.

## R squared (R^2)

Square of the correlation coefficient proportion of the variability explained by the linear
regression model. For example, an r squared of 75% means that 75% of the variability observed in the
dependent variable is explained by the independent variable.

## R squared (R^2)

Square of the correlation coefficientthe proportion of the variability in one series that can be
explained by the variability of one or more other series.