Glossary of economics research
Results of search for correlation follow:
correlation:
Two random variables are positively correlated if high values of one are
likely to be associated with high values of the other. They are negatively
correlated if high values of one are likely to be associated with low values
of the other.
Formally, a correlation coefficient is defined between the two random
variables (x and y, here). Let sx and xy denote the
standard devations of x and y. Let sxy denote the
covariance of x and y. The correlation coefficent between x and y,
denoted sometimes rxy, is defined by:
rxy = sxy / sxsy
Correlation coefficients are between -1 and 1, inclusive, by definition. They
are greater than zero for positive correlation and less than zero for negative
correlations.
Source: Greene, 1997, page 102-3
Contexts: statistics; econometrics
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