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Learning pandas - Second Edition by Michael Heydt

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Correlation

Correlation is one of the most common statistics and is directly built into the pandas DataFrame. A correlation is a single number that describes the degree of relationship between two variables, and specifically between two sequences of observations of those variables.

A common example of using a correlation is to determine how closely the prices of two stocks follows each other as time progresses. If the changes move closely, the two stocks have a high correlation, and if there is no discernible pattern they are uncorrelated. This is valuable information that can be used in a number of investment strategies.

The level of correlation of two stocks can also vary slightly with the time frame of the entire dataset, as well as the ...

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