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Correlation and Regressions
What does the correlation coefficient measure?
The correlation coefficient measures the strength and direction of the linear relationship between two variables, ranging from -1 to +1.
What is the purpose of regression analysis in banking?
To predict one variable from another using statistical relationships.
What is a positive correlation in banking context?
A positive correlation means both variables move in the same direction, e.g., when GDP rises, bank credit demand also tends to rise.
What is a perfect positive correlation?
Correlation coefficient equal to +1 indicating perfect direct relationship.
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