Learn about correlation, including how it measures the relationship between securities, along with how it aids in diversifying your portfolio and risk management.

What Is the Correlation Coefficient? The correlation coefficient quantifies the strength and direction of a linear relationship between two variables, key in assessing investment risks and optimizing ...

Correlation coefficients range from -1 to +1, indicating the strength of relationships between variables. Investors use correlation coefficients for portfolio diversification to reduce risk.

Correlation coefficients are indicators of the strength of the linear relationship between two different variables, x and y. A linear correlation coefficient that is greater than zero indicates a ...

Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. A negative correlation means that two variables ...

Investments with low correlations to the S&P 500 can provide diversification benefits. These investments often represent different asset classes as opposed to individual stocks. A basket of low ...