Financial Terms / C - D / Correlation

Correlation

In finance, correlation is the degree to which the prices of two different securities move with respect to each other. If both securities mostly move up and down in tandem, there is a strong positive correlation.

However, if the two securities move in opposite directions most of the time, there is a strong negative correlation. A correlation should always have a value between -1 (strong negative correlation) and +1 (strong positive correlation).