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 ...

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

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