What is the correlation coefficient between the two stocks?
-1
The correlation coefficient is measured on a scale from -1 to 1. A correlation coefficient of 1 indicates a perfect positive correlation between the prices of two stocks, meaning the stocks always move the same direction by the same amount.
How do you calculate the correlation between two stocks in Excel?
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What is correlation in stock?
Correlation is a statistical measure that determines how assets move in relation to each other. It can be used for individual securities, like stocks, or it can measure general market correlation, such as how asset classes or broad markets move in relation to each other. Correlation is measured on a scale of -1 to +1.
How are stocks correlated?
Stocks can be positively correlated when they move up or down in tandem. A correlation value of 1 means two stocks have a perfect positive correlation. If one stock moves up while the other goes down, they would have a perfect negative correlation, noted by a value of -1.
Is correlation and correlation coefficient the same?
Correlation is the process of studying the cause and effect relationship that exists between two variables. Correlation coefficient is the measure of the correlation that exists between two variables.
How do you interpret a correlation coefficient?
A correlation of -1.0 indicates a perfect negative correlation, and a correlation of 1.0 indicates a perfect positive correlation. If the correlation coefficient is greater than zero, it is a positive relationship. Conversely, if the value is less than zero, it is a negative relationship.