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CORREL Excel Function (Correlation)

CORREL Function in Excel

CORREL Function in Excel (Table of Contents)

  • CORREL in Excel
  • Correlation Formula in Excel
  • How to use CORREL Function in Excel?

CORREL in Excel

CORREL Function is categorized as statistical functions in Excel. The CORREL formula in Excel is used to find out the correlation coefficient between two variables. CORREL in Excel returns the correlation coefficient of the array1 and array2.

You can use the correlation coefficient to determine the relationship between two properties.

For example – The correlation between a particular stock and the market index.

CORREL Formula in Excel

CORREL Formula in Excel

CORREL Formula in Excel has two compulsory parameters i.e. array1, array2.

Compulsory Parameters:

  • array1: It is required a set of independent variable.
  • array2:  It is a set of dependent variable.

Remarks

The correlation coefficient formula is:

correlation coefficient equation

where and are the sample means and calculated by average(array1) and average(array2).

If the value of the correlation coefficient r is close to +1, it indicates a strong positive correlation, and if r is close to -1, it shows a strong negative correlation.

How to use CORREL Function in Excel?

CORREL function in Excel is very simple and easy to use. Let understand the working of CORREL in Excel by some examples. CORREL function in Excel can be used as worksheet function and as VBA function.

CORREL function as worksheet function.

CORREL in Excel Example #1

In the first example, let’s consider two sets of data Data1 and Data2 as shown in the below table.

CORREL Example 1

=CORREL(B4:B22,C4:C22) =0.6642909

CORREL in Excel Example #2

In this example, we consider the data set of weekly changes for a stock A as data1 and SP 500 weekly changes as data 2 show in the below table. Now calculate the correlation coefficient function using CORREL formula in excel, =CORREL(F3:F23,G3:G23) and output will be- 0.89011522.

CORREL Example 2

CORREL in Excel Example #3

In this example we are taking a perfect positive correlation, for example, considering a variable X value increases with the value of variable and value of variable X decreases with the value of variable Y decreases as shown in the below table.

CORREL Example 3

CORREL in Excel Example #4

Here we consider an example of a perfect negative correlation. As the value of variable X increases when the value of variable Z decreases and as the value of variable X decreases, the value of variable Z increases as shown in the below example.

CORREL Example 4

CORREL function in Excel can be used as a VBA function.

Let’s consider a dataset in excel starts from A2.

Sub CORRELfunction()

Dim r As Double

Dim ra As Range

Dim rb As Range

Set ra = Range(“A2”, Range(“A2”).End(xlDown)) //ra stores the ranges from A2 to last entry in column A.

Set rb = ra.Offset(, 1) //rb stores the array values from C2 to all values  in column C.

r = Application.WorksheetFunction.correl(ra, rb)  //Correlation function value is stored in r variable.

MsgBox r //prints the output in Message Box.

End Sub

Things to Remember About the (CORREL) Correlation Function in Excel

  • #N/A error – (CORREL) Correlation function in Excel through the #N/A error if the given arrays are of different lengths. Means, if array1 and array2 contain different numbers of data points, CORREL will return the #N/A error value.
  • #DIV/0 error – Correlation function in Excel through the #DIV/0 error if either of the given arrays (array1, array2) are empty or if the standard deviation of the values equals zero.

If the supplied array or reference argument contains text/string, logical values, or empty value, then those values are ignored automatically.

  • (CORREL) Correlation function in Excel includes the value zero in its calculation.

You can download this (CORREL) Correlation Function in Excel template here – CORREL Function Excel Template

Recommended Articles

This has been a guide to (CORREL) Correlation Function in Excel. Here we discuss the CORREL Formula in excel and how to use CORREL function along with excel example and downloadable excel templates. You may also look at these useful functions in excel –

  • LN Excel Function
  • TAN Excel Function (Tangent)
  • SUBTOTAL Excel Function
  • DATE Excel Function

The post CORREL Excel Function (Correlation) appeared first on Learn Investment Banking: Financial Modeling Training Courses Online.



This post first appeared on Free Investment Banking Tutorials |WallStreetMojo, please read the originial post: here

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CORREL Excel Function (Correlation)

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