To evaluate the association between two or more variables we use Correlation. It has Correlation coefficients which are indicators of the strength of the linear relationship between two different variables say x and y. The correlation coefficient greater than zero indicates that a positive relationship, while a value less than zero indicates that a negative relationship. A negative correlation is also called inverse correlation which is a key concept in the creation of diversified portfolios that can better withstand portfolio volatility.
The most common Correlation coefficient is generated by the Pearson product-moment correlation which is used to measure the linear relationship between two variables. The Pearson Correlation is also called parametric correlation.
