Question
Why is correlation easier to interpret than covariance?
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Answer
It is standardized, so strength is unit-free.
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Question
What does the Pearson correlation coefficient measure between two variables?
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Answer
Strength and direction of their linear relationship.
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Question
In return analysis, what does excess kurtosis of 0 indicate?
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Answer
The distribution has normal kurtosis.
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Question
What does a correlation of 0 tell you about two variables?
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Answer
No linear relationship; nonlinear dependence may still exist.
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