Hence, they have a positive relationship. When car sales decreases, demand for gas increases too. On the contrary, the relationship is negative if the variables move in the opposite direction.įor example, let’s consider two variables – car sales and demand for gas. That is, even if both the variables fall together, they would have a positive relationship. For example, if the variables move in the same direction, there is a positive relationship. The relationship can be positive or negative. Correlation measures the strength or extent of the relationship between two variables, whereas variance measures the spread of data from the mean.Ĭovariance meaning can be referred to as an analysis tool or metric that establishes the relationship movement of two variables. It differs from correlation and variance, though all are related mathematical concepts. When negative, they move in the opposite direction (one increases while the other decreases).
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