Covariance and Correlation

Covariance and Correlation are very helpful in understanding the relationship between two continuous variables. Covariance tells whether both variables vary in same direction (positive covariance) or in opposite direction (negative covariance). There is no significance of covariance numerical value only sign is useful. Whereas Correlation explains about the change in one variable leads how much proportion change in second variable. Correlation varies between -1 to +1. If correlation value is 0 then it means there is no Linear Relationship between variables however other functional relationship may exist.

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