Correlation Calculator

Free Correlation Calculator

Measure the Relationship Between Two Investments

The Correlation Calculator helps investors understand how two investments move in relation to each other. By analyzing historical returns, this tool calculates the correlation coefficient, showing whether assets tend to move together, inversely, or independently. A strong positive correlation indicates that the assets move in the same direction, while a strong negative correlation shows they move in opposite directions. Using this calculator can help diversify your portfolio, reduce risk, and make better-informed decisions about combining assets. It is a valuable resource for both beginner and experienced investors seeking to optimize portfolio performance through careful selection of complementary investments. Visualize the connection between assets and strengthen your investment strategy with this simple and effective calculator.

Measure the statistical relationship between two assets.

Asset A Returns (%)

Asset B Returns (%)

Calculation Results

Correlation Coefficient

0.00

Interpretation

--

Detailed Breakdown

Formula Used: Covariance(A, B) / (StdDev(A) × StdDev(B))

Correlation Calculator Guide

The formula we use

Correlation (ρ) = Covariance(A,B) ÷ (σ_A × σ_B)
ρ ranges from −1 (perfectly negative) to +1 (perfectly positive)
ρ ≈ 0 means no linear relationship between assets

Example calculation

Asset A Returns: 8%, −3%, 5%, 7%

Asset B Returns: 6%, −1%, 4%, 8%

Compute mean of each asset’s returns
Compute covariance between A and B
Compute σ_A and σ_B (standard deviations)
ρ = Cov(A,B) ÷ (σ_A×σ_B) = 0.93 → strong positive correlation

How to use this calculator

Enter periodic returns for Asset A in % (comma or space separated).
Enter periodic returns for Asset B in % using the same number of periods.
Click Calculate Correlation to compute ρ.
Interpret the result: near +1 = move together, near −1 = move opposite.

Tips for using correlation

Diversify: Combine low or negatively correlated assets to reduce portfolio volatility.
Use consistent periods: Monthly with monthly, daily with daily.
Check sample size: Small data sets can give misleading results.
Track over time: Correlations can change across market regimes.

This guide is educational; correlation does not imply causation.

Benefits of Using Our Correlation Calculator

Understand Asset Relationships

Identify how two or more assets move in relation to each other to manage portfolio risk.

Better Diversification

Spot highly correlated assets to avoid overexposure and improve portfolio stability.

Data Driven Decisions

Use historical price data to make informed investment choices based on correlation coefficients.

Beginner Friendly

Easy to read results make it simple for new investors to understand correlations without advanced stats.

Mobile Responsive

Check correlations on any device, from desktop to mobile, without losing clarity or functionality.

Secure & Private

All calculations happen locally in your browser; your data is never shared or stored online.

Frequently Asked Questions

What is a Correlation Calculator?

This tool measures how two or more assets move in relation to each other, with values ranging from -1 to +1.

Why is correlation important in investing?

Understanding correlations helps reduce portfolio risk and improve diversification strategies.

Can I analyze multiple assets?

Yes. You can calculate correlations between multiple pairs to see how different investments interact.

Is this calculator suitable for beginners?

Absolutely. It provides simple visual outputs and explanations to understand asset relationships easily.

Can this tool guide my investment decisions?

Yes. By identifying highly correlated or inversely correlated assets, you can plan a more balanced portfolio.

Is my data secure?

Yes. All inputs are processed locally on your device, ensuring full privacy and security.