Define correlation coefficient for two variables is -1, Financial Management

Assignment Help:

What does it mean when we say that the correlation coefficient for two variables is -1? What does it mean if this value were zero? What does it mean if it were +1?

Correlation is calculated by the correlation coefficient, denoted by the letter r. The correlation coefficient can take on values among +1.0 (perfect positive correlation) to -1.0 (perfect negative correlation).  The closer r is to +1.0, the much more the two variables will tend to move along with each other at similar time.  The closer r is to -1.0, the much more the two variables will tend to move opposite each other at similar time.  An r value of zero points out that the variables’ values aren't related at all.  This is termed as statistical independence.


Related Discussions:- Define correlation coefficient for two variables is -1

Cost of capital, discuss the cost of capital in finance

discuss the cost of capital in finance

Business proposal of a pet care shop, With the advent of globalization ther...

With the advent of globalization there had been much importance which is being given to the issues related to the general health of pets and other associated services as the people

Describe the general pattern of cash flows, Describe the general pattern of...

Describe the general pattern of cash flows from a bond with a positive coupon rate. Cash flows as of a bond with a positive coupon rate consist of periodic interest payments an

What is control risk, What is Control risk That material misstatement c...

What is Control risk That material misstatement could take place and not be detected, or prevented on a timely basis, by accounting and internal control systems. All audits

Merits of net present value method, Q. Merits of net present value method? ...

Q. Merits of net present value method? Merits of NPV method:- (i) Time value of funds is taken into consideration: - For the reason that this method takes into account the t

Surplus economic unit deal with a deficit economic unit, What can a financi...

What can a financial institution often do for a surplus economic unit that it would have difficulty doing for itself if the surplus economic unit (SEU) were to deal directly with a

Non-agency mortgage backed securities, The mortgage-backed securiti...

The mortgage-backed securities dealt with till now are agency mortgage backed securities. There are other MBS which can be for any kind of real estate property.

Effect on exchange rates, Effect on Exchange Rates As we know, one of t...

Effect on Exchange Rates As we know, one of the most vital determinants of changes in relative exchange rates is the relative inflation rate. Assuming a free and open market, i

Financial capital, Assume that you have just "run out of money" and are una...

Assume that you have just "run out of money" and are unable to move your "idea" from its development stage to production and the startup stage.  However, you remain convinced that

Investor’s considerations -financial market, Investor's Considerations ...

Investor's Considerations As mentioned above, every investor before taking an investment decision, must consider the following aspects: Risk: The primary consideration for t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd