The correlation coefficient is in the interval [- 1, 1]. When the correlation coefficient is-1, it means that there is a complete negative correlation, indicating that the change direction and range of the returns of the two assets are completely opposite. When the correlation coefficient is+1, it means perfect positive correlation, indicating that the change direction and amplitude of the returns of the two assets are exactly the same. When the correlation coefficient is 0, it means irrelevant.

The absolute value of r is between 0 and 1. Generally speaking, the closer R is to 1, the stronger the correlation between X and Y. Conversely, the closer R is to 0, the weaker the correlation between X and Y. ..

Extended data:

Correlation: when one or several interrelated variables take a certain value, the value of the corresponding other variable is uncertain, but it still changes within a certain range according to a certain law. This relationship between variables is called correlation with uncertainty.

(1) Complete correlation: the relationship between two variables. The quantitative change of one variable is only determined by the quantitative change of another variable, that is, the functional relationship.

⑵ Incomplete correlation: The relationship between two variables is between irrelevant and completely correlated.

⑶ Irrelevance: If the quantitative changes of two variables are independent of each other, it is irrelevant.

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