Correlation Coefficient

The correlation coefficient a concept from statistics is a measure of how well trends in the predicted values follow trends in the actual values in the past. It is a measure of how well the predicted values from a forecast model "fit" with the real-life data.

The correlation coefficient is a number between 0 and 1. If there is no relationship between the predicted values and the actual values the correlation coefficient is 0 or very low (the predicted values are no better than random numbers). As the strength of the relationship between the predicted values and actual values increases so does the correlation coefficient. A perfect fit gives a coefficient of 1.0. Thus the higher the correlation coefficient the better.

Syntax:

CorrelationCoefficient
CorrelationCoefficient()
CorrelationCoefficient(“Period”)
CorrelationCoefficient(“OutPutStartCell”, ”Period”)

Inputs:

'Open' and 'Close' columns values

Parameters:

• Period (default=14)
• OutPutStartCell (default=the next blank column in the worksheet)

Examples:

CorrelationCoefficient
CorrelationCoefficient()
CorrelationCoefficient(“14”)
CorrelationCoefficient(14)
CorrelationCoefficient(“G2”, “14”)
CorrelationCoefficient(G2, 14)