CORREL Excel Function (Correlation)

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. It returns the correlation coefficient of the array1 and array2.

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

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

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 an independent variable.
• array2:  It is a set of the dependent variable.

Remarks

The correlation coefficient formula is:

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 correlationNegative CorrelationA negative correlation is an effective relationship between two variables in which the values of the dependent and independent variables move in opposite directions. For example, when an independent variable increases, the dependent variable decreases, and vice versa.read more.

How to use the CORREL Function in Excel?

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

CORREL function as a worksheet function.

Example #1

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

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

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 coefficientCalculate The Correlation CoefficientCorrelation Coefficient, sometimes known as cross-correlation coefficient, is a statistical measure used to evaluate the strength of a relationship between 2 variables. Its values range from -1.0 (negative correlation) to +1.0 (positive correlation). read more function using CORREL formula in excel, =CORREL(F3:F23,G3:G23), and output will be- 0.89011522.

Example #3

In this example, we are taking a perfect positive correlationPositive CorrelationPositive Correlation occurs when two variables display mirror movements, fluctuating in the same direction, and are positively related. In layman's terms, if one variable increases by 10%, the other variable grows by 10% as well, and vice versa.read more; for example, considering a variable X value increases with the value of a variable, and the value of variable X decreases with the value of variable Y decreases as shown in the below table.

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 function in Excel can be used as a VBA functionCan Be Used As A VBA FunctionVBA functions serve the primary purpose to carry out specific calculations and to return a value. Therefore, in VBA, we use syntax to specify the parameters and data type while defining the function. Such functions are called user-defined functions.read more.

Let’s consider a dataset in excel that 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 

• #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 excel standard deviation of the values equals zero.

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

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

CORREL Excel Function Video

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