Defining Correlation in Finance
Correlation in finance is the statistical measure of the degree to which two securities are related to its other. This relationship is measured during a certain time period.
Correlation in finance is the statistical measure of the degree to which two securities are related to its other. This relationship is measured during a certain time period.
Correlations are expressed on a scale of -1.0 to +1.0, as follows:
- +1.0, two assets move in an identical direction, 100% of all times
- +0.0, two assets move in random directions