Lesson 1261 of 1524
Regression Analysis in Finance
A correlation coefficient called r is used to assess the strength and direction of the correlation.
Practice this chapterA correlation coefficient called r is used to assess the strength and direction of the correlation. A positive value of r means that when x increases, y tends to increase and when x decreases, y tends to decrease (positive correlation).
A negative value of r means that when x increases, y tends to decrease and when x decreases, y tends to increase (negative correlation) Correlation is the measure of association between two numeric variables.
correlation coefficient — a measure of the strength and direction of the linear relationship between two variables. correlation coefficient called r — used to assess the strength and direction of the correlation. correlation — the measure of association between two numeric variables. value of r — always between - 1 and + 1.
Worked example
What does “correlation coefficient” mean in Regression Analysis in Finance?
- 1Use the wording this chapter gives for correlation coefficient.
- 2The book says: a measure of the strength and direction of the linear relationship between two variables.
- 3Do not use the meaning of correlation coefficient called r. That term means used to assess the strength and direction of the correlation.
Result: a measure of the strength and direction of the linear relationship between two variables
Why. That is the meaning this chapter gives for correlation coefficient.
Do not swap correlation coefficient and correlation coefficient called r. correlation coefficient means a measure of the strength and direction of the linear relationship between two variables. correlation coefficient called r means used to assess the strength and direction of the correlation.
Practice margin
This chapter
A fresh set from this chapter only. Choose 10 or 20. Multiple choice and fill-in, with no repeat inside the set.