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.

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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 ...

What is Pearson correlation test, Pearson product moment correlation or Pearson r? Pearson’s correlation helps us understand the relationship between two quantitative variables when the relationship ...