Correlation Coefficient (CC)

Correlation Coefficient (CC)

Correlation Coefficient (CC) is used in statistics to measure the correlation between two sets of data. In the trading world, the data sets would be stocks, etf's or any other financial instrument. The correlation between two financial instruments, simply put, is the degree in which they are related. Correlation is based on a scale of 1 to -1. The closer the Correlation Coefficient is to 1, the higher their positive correlation. The instruments will move up and down together. The higher the Correlation efficient is to -1, the more they move in opposite directions. A value at 0 indicates that there is no correlation.

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