In the above example, Apple and the S&P 500 have a correlation coefficient of 0.73817, which indicates a strong relationship between the two over 90 days of data.

For example, when two stocks move in the same direction, the correlation coefficient is positive. Conversely, when two stocks move in opposite directions, the correlation coefficient is negative.

In our example, we find Pearson’s correlation coefficient to be r = − 0.94. We can interpret this as evidence of strong negative correlation given that r is a negative value and close to − 1. Step ...

For example, folks commonly believe high oil prices are a strain on spending and therefore are bad for the economy and stocks, ... The correlation coefficient is a number between 1 and -1.

A statistical measure of the linear relationship between two variables. The range of a correlation co-efficient is from -1 to +1. Variables with a positive correlation move in the same direction ...

Example of using correlation coefficients. Let's say you own three ASX shares, which we'll call Company A, Company B, and Company C. All three are growth stocks in the technology space.

In statistics, a perfectly negative correlation is represented by the value -1.0, while 0 indicates no correlation, and +1.0 indicates a perfectly positive correlation.