Investment & trading encyclopedia

Understand investment products, market mechanics, indicators and research terminology. Each entry includes an explanation, example, cautions and related learning.

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Portfolio & riskIntermediate

Correlation

Correlation is a statistic between −1 and +1 that measures how closely two return series move together in a straight-line sense. A value of +1 means they move in perfect step, 0 means no linear relationship, and −1 means they move in exactly opposite directions.