Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Yarilet Perez is an experienced multimedia ...

Correlation coefficients range from -1 to +1, indicating the strength of relationships between variables. Investors use correlation coefficients for portfolio diversification to reduce risk.

In the first case, there is a strong upward-sloping relationship between X and Y; in the second case, no apparent relationship; in the third case, a strong downward-sloping relationship. Note the ...