The correlation coefficient is generally preferred to the covariance because
A)the correlation coefficient is a unit free measure of linear association.
B)the covariance is bounded to fall between -1 and 1.
C)the correlation coefficient must be positive.
D)the covariance measures the quadratic relationship between two random variables.

Question

Quizplus · Accepted Answer

The correlation coefficient is a unit-free measure of linear association, meaning that it does not depend on the units of measurement of the variables being analyzed. In contrast, covariance is measured in squared units, which can make it difficult to compare across different analyses. Additionally, the correlation coefficient is bounded to fall between -1 and 1, making it easier to interpret than the covariance. The other options (B, C, and D) are not accurate descriptions of the differences between covariance and correlation.

The Correlation Coefficient Is Generally Preferred to the Covariance Because