Correlation
By Sitraka Forler · Lecturer, Durham Business SchoolUpdated 13 September 2026 About this site
Linear relationship between two variables, from −1 to +1.
A correlation of +1 means two assets move perfectly together; −1 means perfectly inverse; 0 means no linear relationship. Diversification works by combining low-correlation assets.
Example
corr_matrix = returns_df.corr()