Correlation coefficient

Definition

The goal of the correlation coefficient (here we use the pearson correlation coefficient) is to measure the relationship between 2 variables. The correlation coefficient varies between -1 and 1 :

• If the value is near 0 it means that there is no relationship between the 2 variables.
• If the value is around 1 it means that when a variable increase the other variable increase too, if the correlation coefficient is equal to 1 this increase is proportional.
• If the value is around -1 it means that when a variable increase the other variable decrease, if the correlation coefficient is equal to -1 the increase of one variable is proportional to the decrease of the other.

Formula

Where r is the correlation coefficient between he variables x and y.

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