Degree to which two series of numbers plot as a straight line. A' Correlation Coefficient' of 1 (or -1) indicates that the two series of numbers plot exactly along a straight line. A correlation coefficient of zero indicates that there is no straight line relationship between the two series of numbers. As applied to two portfolios, a high correlation coefficient for the relative returns indicates that the portfolio values have moved in tandem and a low correlation coefficient means the opposite. When the correlation coefficient is high, one portfolio could have been used as a surrogate or a hedge for the other.
Barry Goldsmith
| APA | Barry Goldsmith. (2010). correlation coefficient. Retrieved September 20, 2026, from http://smartdefine.org/correlation_coefficient/definitions/1150871 |
| Chicago | Barry Goldsmith. 2010. "correlation coefficient" http://smartdefine.org/correlation_coefficient/definitions/1150871 (accessed September 20, 2026). |
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