### Correlation and Copula

*Correlation*

X | Y |

1 | 1 |

-1 | 1 |

0 | 0 |

*relationship betweem the two variables.*

**linear**The same kind of simple yet common mistake as the misconception of volatility.

*Copula*

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## Monday, June 4, 2007

###
Correlation and Copula

The correlation coeffecient is 0, but the value of Y is perfectly predicatable when the value of X is known. Correlation is only an indication of the strength of a **linear** relationship betweem the two variables.
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*Correlation*

X | Y |

1 | 1 |

-1 | 1 |

0 | 0 |

The same kind of simple yet common mistake as the misconception of volatility.

*Copula*

Posted by MING CHEN at 1:59 PM

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