We will use the Pearson Correlation Coefficient to determine the two assets’ correlation. This method, one of the most popular for measuring the linear relationship between two variables, will help us understand the relationship between two stocks: Facebook and Amazon, in our case. The average M...
correlationassociationCovariance is a measure of association, or covariability, between two variables (e.g., variables X and Y ). A positive covariance indicates positive association between X and Y , whereas a negative covariance indicates a negative association between X and Y . However, the ...
In another post, I performed binary logisticregressionand obtained ORs for two continuous independent variables. Let’s interpret those odds ratios! In that post, I assess whether measures of conservativeness and establishmentarianism predict membership in the Freedom Caucus within the U.S. House of...
Analysis of results Different statistical parameters are used to measure the qualitative and quantitative agreements of AAPL with respect to experimental values. The Pearson correlation coefficient r[{X}, {Y}] is a measure of the linear correlation between two variables, {X} and {Y}:...
1. Large portfolios Calculation of Value at Risk for a portfolio not only requires one to calculate the risk and return of each asset but also the correlations between them. Thus, the greater the number or diversity of assets in a portfolio, the more difficult it is to calculate VaR. ...
where x i and y i are ranks obtained for raw scores X i and Y i of variables X and Y . Apart from the performance evaluation, the experiments were also used for testing different aspects of the method itself, i.e. its sensibility to parameters and corpus. As mentioned, the method dep...
There are different tests that fall in the correlation family. Which one is chosen to be used can depend on things like type of data at hand. For example, correlation calculations can be performed on nominal, ordinal, interval, and ratio ...
asanonparametriccorrelationcoefficient,andmeansjustthesamethingasthe Pearson r in terms of the strength and direction of the relationship between these two variables. Symmetric Measures .158 .819 .158 .819 16 Phi Cramer's V Nominal by Nominal ...
The equation above reveals that the correlation between two variables is the covariance between both variables divided by the product of the standard deviation of the variables. While both measures reveal whether two variables are positively or inversely related, the correlation provides additional informa...
Like other aspects of statistical analysis, correlation can be misinterpreted. Small sample sizes may yield unreliable results, even if it appears as though correlation between two variables is strong. Alternatively, a small sample size may yield uncorrelated findings when the two variables are in fac...