Free CFA Level I Flashcards

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Interpret correlation between two variables.


Correlation is a standardized measure of association between two random variables. It ranges in value from -1 to +1 and is equal to

Scatter plots are useful for revealing nonlinear relationships that are not measured by correlation.
Correlation does not imply that changes in one variable cause changes in the other. Spurious correlation may result by chance or from the relationships of two variables to a third variable.

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