V.9:12 (482-485) SIDEBAR: Explaining r by Jim Bianco, C.M.T.

V.9:12 (482-485) SIDEBAR: Explaining r by Jim Bianco, C.M.T.
Item# \V09\C12\SIDEBEX.PDF
Availability: In Stock

Product Description


Correlation analysis measures the degree of relationship between two variables. The correlation coefficient r is one popular statistical index for this purpose. The values for r range between +1 to -1; a +1 reading indicates that the two variables are perfectly correlated, while a -1 reading indicates a perfect inverse relationship. An r of 0 indicates that the two variables have no correlation. The correlation coefficient r measures the relationship between two variables that are believed to be linear. For instance, a straight line is used to describe the relationship if the two variables were plotted on a graph using an X and Y axis. Sometimes, two variables will have a relationship that is described by a line that curves. The use of the formula for r is restricted to relationships that are linear.

The correlation coefficient measures only the degree of association between two variables. It is important to remember that r is not a measure of cause and effect. A large positive r does not mean that if one variable is large, this causes the other variable to be large.

The formula for r is :

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order