Which of the following statements is true?
A)The correlation coefficient is always greater than the covariance.
B)The covariance is always greater than the correlation coefficient.
C)The covariance may be equal to the correlation coefficient.
D)Neither the covariance nor the correlation coefficient can be equal to zero.

Question

Quizplus · Accepted Answer

The covariance and the correlation coefficient can be equal if both variables have the same units of measurement and a strong linear relationship. However, in general, the correlation coefficient is preferred because it is standardized and allows for easier interpretation of the strength and direction of the relationship between two variables. Neither the covariance nor the correlation coefficient has to be always greater than or equal to zero.

Which of the Following Statements Is True