# What does a correlation coefficient indicate about data?

##### 1 Answer

Nov 3, 2015

#### Answer:

Nature of the movement of variation in the given data set.

#### Explanation:

The correlation coefficient is meaningful only when there is a cause and effect relationship between the two variables X and Y.

Using the formula, for the correlation coefficient, we can obtain a value. But it becomes meaningful only if there is a cause and effect relationship between X and Y.

Once the dependence between the variables is established, a positive correlation coefficient means that both variables tend to move in the same direction.

a negative correlation means the movement is in opposite direction.