What is the Correlation Coefficient

What is the Correlation Coefficient - very low (the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
What is the Correlation Coefficient? The correlation coefficient a concept from statistics is a measure of how well trends in the predicted values follow trends in past actual values. 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
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 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....
View Full Document

Ask a homework question - tutors are online