Coefficient of correlation

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The coefficient of correlation is a value between -1 and 1 that indicates how strong the relationship between two variables is.

A value of -1 indicates that there is a positive correlation between the independent and dependent variable. It means whenever there is an increase in the independent variable there is decrease in the dependent one.

A value of 1 indicates that there is a positive correlation between the independent and dependent variable. It means whenever there is an increase in the independent variable there is also an increase in the dependent one.

A value of 0 means that there is no identifiable linear relationship between the independent and dependent variable.

Pearson's correlation coefficient is the most widely used formula to calculate the correlation coefficient for cardinal data.

Part of M7-Quantitative Decision Methods-S7 - Correlation and Time series See also: Dependent variable See also: Independent variable

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