Skip to content

Vs (Correlation & Covariance)

Description

  • Both covariance and correlation measure the relationship and the dependency between two variables.
  • Covariance indicates the direction of the linear relationship between variables.
  • Correlation measures both the strength and direction of the linear relationship between two variables.
  • Correlation values are standardized.
  • Covariance values are not standardized.
  • While correlation coefficients lie between \(-1\) and \(+1\), covariance can take any value between \(-\infty\) and \(+\infty\).
  • Correlation is dimensionless. It's a unit-free measure of the relationship between variables. This is because we divide the value of covariance by the product of standard deviations which have the same units.