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

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.

Correlation coefficients are used in science and finance to assess the degree of association between two variables, factors, or data sets. For example, as high oil prices are favorable for crude ...

Thus, if we calculate the correlation coefficient including this outlier, it would suggest a weaker correlation between the stock and the S&P 500 than actually exists on most trading days.

There are two key assumptions for the Spearman’s rank correlation coefficient: The data should be on the ordinal or continuous scale. An example of an ordinal variable is a survey question that ranks ...

Example 8.1: Correlation. This example defines modules to compute correlation coefficients between numeric variables and standardized values for a set of data. /* Module to compute correlations */ ...

I often teach in my statistics class that correlation should not be confused with causation. That is, observing that two variables move together does not necessarily mean that one variable caused the ...

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