The Law Dictionary

Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

CORRELATION Definition & Legal Meaning

Definition & Citations:

A statistical measure that indicates the extent to which two or more variables (such as financial ASSET prices) move in the same direction, or different directions. Correlation is often used to price and manage certain COMPLEX DERIVATIVES (e.g., MULTIINDEX OPTIONS), quantify PORTFOLIO RISK exposures, and determine appropriate HEDGE RATIOS. See also COEFFICIENT, RISK.

Disclaimer

This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.