The correlation coefficient _____.
A) is the same as the covariance
B) can be larger than 1
C) cannot be larger than 1
D) cannot be negative

Question

Quizplus · Accepted Answer

The correlation coefficient ranges from -1 to 1, with a value of 1 indicating a perfect positive correlation, 0 indicating no correlation, and -1 indicating a perfect negative correlation. Therefore, it cannot be larger than 1. A is incorrect because covariance measures the direction of the linear relationship between two variables but does not standardize the measure like correlation does. B is incorrect because the correlation coefficient cannot be larger than 1. D is incorrect because the correlation coefficient can be negative, indicating a negative correlation between the two variables being examined.

The Correlation Coefficient _____