Which of the Following Statements Best Describes Correlation Analysis in a Simple

question 191

Short Answer

Which of the following statements best describes correlation analysis in a simple linear regression? $\begin{array}{|l|l|}\hline\text { A. } & \text {Correlation analysis measures the strength of a relationship between two }\\& \text {numerical variables. }\\\hline \text { B. } & \text { Correlation analysis measures the strength and direction of a linear} \\& \text {elationship between two numerical variables. }\\\hline \text { C. } &\text {Correlation analysis measures the direction of a relationship between two }\\& \text { numerical variables.}\\\hline \text { D. } &\text {Correlation analysis measures the strength of a relationship between }\\& \text {two categorical variables. }\\\hline\end{array}$

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Definitions:

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases, and vice versa.

Systematic Correlation

The degree to which the returns of different investments move together due to changes in the overall market.

Expected Return

The average return an investment is projected to generate based on historical data or probability-weighted scenarios.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents.