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EXCEL CORREL FUNCTION
Excel CORREL Function Introduction
The CORREL function is classified as a statistical function. The correlation coefficient between two variables will be computed. As a financial analyst, we may use the CORREL function to discover the correlation between two variables, such as the correlation between a certain stock and the market index.
Description of Excel CORREL Function
Syntex:
=CORREL(array1, array2)
Parameter list:
The following parameters are sent to the CORREL function:
1. Array1 (mandatory parameter) – This is the collection of independent variables. It is a value range in a cell.
2. Array2 (mandatory parameter) – This is the list of dependent variables. It is the second value range in the cell.
The correlation coefficient is calculated as follows:
Step By Step Guide of CORREL Function
Example :
Assume we are provided information on the weekly returns of stock A and the percentage change in the market index (S&P 500):
Key Points
1. #N/A error – Occurs when the lengths of the supplied arrays vary. As a result, if Array1 and Array2 have differing amounts of data points, CORREL will return #N/A.
2. #DIV/0 error – This occurs if one of the supplied arrays is empty or if the standard deviation of their values is equal to zero.
3. Text, logical values, and empty cells in an array or reference argument are disregarded; however, cells with the value zero are included.
4. The CORREL function is identical to the PEARSON function, with the exception that in previous versions of Excel (prior to Excel 2003), the PEARSON function may display rounding problems. As a result, in previous versions of Excel, it is best to utilise the CORREL function. Both functions should provide the same results in subsequent versions of Excel.
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