The formula for Pearson’s correlation coefficient, r, relates to how closely a line of best fit, or how well a linear regression, predicts the relationship between the two variables. It is presented ...

In this formula, r represents Pearson's correlation coefficient. ... The most efficient way to find the correlation coefficient of two variables is via spreadsheet. 1 / 6.

Thus, if we calculate the correlation coefficient including this outlier, it would suggest a weaker correlation between the stock and the S&P 500 than actually exists on most trading days.

The correlation coefficient is a number between 1 and -1. ... The r-squared tells you the relative relatedness of two variables—how much of one’s movement can be attributed to the other.

A correlation coefficient measures the strength of the relationship between two variables. The most commonly used correlation coefficient is the Pearson coefficient which ranges from -1.0 to +1.0.

In this article, we will explore the theory, assumptions and interpretation of Pearson’s correlation, including a worked example of how to calculate Pearson’s correlation coefficient, often referred ...