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What Is a Correlation Coefficient?

By Matthew Frankel, CFP – Updated Aug 30, 2024 at 4:57PM

Key Points

  • Correlation coefficient measures the strength and direction of a linear relationship between two variables.
  • It ranges from -1 to 1, where 1 indicates a perfect positive relationship and -1 indicates a perfect negative relationship.
  • A coefficient of 0 indicates no linear relationship between the variables.

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