What does a correlation coefficient indicate?

The correlation coefficient is a statistical measure that quantifies the degree to which two variables are related, indicating both the strength and direction of their relationship. A positive correlation coefficient suggests that as one variable increases, the other also tends to increase, while a negative correlation coefficient indicates that as one variable increases, the other tends to decrease. The value of the coefficient ranges from -1 to 1, where -1 represents a perfect negative correlation, 1 represents a perfect positive correlation, and 0 suggests no correlation at all. This measure is essential in data analytics as it helps analysts understand relationships between variables, which can inform predictions and decisions. Understanding this concept allows one to interpret data relationships effectively, distinguishing it clearly from indicators related to data volume, storage efficiency, or the credibility of data sources.