Quick Definition

Negative correlation refers to a relationship between two variables where one variable increases as the other decreases.

Formula

Examples

• 1When stock prices rise, bond prices often fall, reflecting a negative correlation between stocks and bonds.
• 2During economic downturns, luxury goods sales may decrease while discount retailer sales increase, showing a negative correlation.
• 3In a portfolio, gold often increases in value when the stock market declines, illustrating negative correlation between gold and stocks.
• 4Currency pairs in Forex trading, like USD/EUR, often move inversely to each other, demonstrating negative correlation.

Tags