What is Correlation?

Correlation is a statistical measure that shows the relationship between two variables, indicating how one variable changes relative to another. The correlation coefficient ranges from -1 to +1, where positive values indicate both variables increase together, negative values mean one decreases as the other increases, and zero means no relationship exists.

Understanding correlation helps businesses identify patterns and relationships that can influence decision-making. For example, analyzing the correlation between marketing spending and sales growth can guide budget allocation. However, it’s crucial to remember that correlation indicates association, not causation, so further analysis may be required to draw accurate conclusions.