What does a strong correlation coefficient indicate?

A strong correlation coefficient indicates a strong linear relationship between two variables. The correlation coefficient, which ranges from -1 to 1, quantifies the degree to which one variable is linearly related to another. A coefficient close to 1 signifies a strong positive correlation, meaning that as one variable increases, the other also tends to increase. Conversely, a coefficient close to -1 signifies a strong negative correlation, which indicates that as one variable increases, the other tends to decrease.

This relationship is key in many fields, such as business and economics, since understanding how variables relate can help in predicting outcomes and making informed decisions. Understanding that a strong correlation coefficient does not imply causation is also important; correlation merely captures the strength and direction of the relationship without implying that one variable causes the changes in the other.