Covariance
noun
Covariance is a measure that indicates the extent to which two random variables change together. A positive covariance means that the variables tend to increase or decrease together, whereas a negative covariance means that when one variable increases, the other tends to decrease.
The covariance between the two stocks shows they generally move in opposite directions.
Often appears as...
- positive covariance
- negative covariance
Usage tips
Neutral
General
noun
In computational contexts, covariance refers to a property of certain mathematical entities indicating how they co-vary in a statistical regime.
The covariance matrix plays a crucial role in multivariate statistics.
Often appears as...
- covariance matrix
- joint covariance
Usage tips
Formal
Technical
noun
Covariance is a measure that indicates the extent to which two random variables change together. A positive covariance means that the variables tend to increase or decrease together, whereas a negative covariance means that when one variable increases, the other tends to decrease.
The covariance between the two stocks shows they generally move in opposite directions.
Often appears as...
- positive covariance
- negative covariance
Usage tips
Neutral
General
noun
In computational contexts, covariance refers to a property of certain mathematical entities indicating how they co-vary in a statistical regime.
The covariance matrix plays a crucial role in multivariate statistics.
Often appears as...
- covariance matrix
- joint covariance
Usage tips
Formal
Technical
Definition 1 of 2
Pro Tip 1/3Understanding Relationships
Covariance helps you see how two variables relate.
In finance, it is used to assess asset risk.
Pro Tip 2/3Positive vs. Negative
Knowing whether covariance is positive or negative impacts analysis.
This is critical for investment strategies.
Pro Tip 3/3Strong vs. Weak
A large magnitude of covariance indicates a strong relationship.
Having some correlation knowledge is beneficial.
Pro Tip 1/3Understanding Relationships
Covariance helps you see how two variables relate.
In finance, it is used to assess asset risk.
Pro Tip 2/3Positive vs. Negative
Knowing whether covariance is positive or negative impacts analysis.
This is critical for investment strategies.
Pro Tip 3/3Strong vs. Weak
A large magnitude of covariance indicates a strong relationship.
Having some correlation knowledge is beneficial.
Pro Tip 1/3Understanding Relationships
Covariance helps you see how two variables relate.
In finance, it is used to assess asset risk.
Pro Tip 2/3Positive vs. Negative
Knowing whether covariance is positive or negative impacts analysis.
This is critical for investment strategies.
Pro Tip 3/3Strong vs. Weak
A large magnitude of covariance indicates a strong relationship.
Having some correlation knowledge is beneficial.
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