A correlation coefficient of -0.8 indicates which type of relationship?

• A. No correlation
• B. Negative correlation
• C. Positive correlation
• D. Perfect correlation

Answer: (B)

The correlation coefficient shows the direction and strength of a linear relationship. The sign tells you the direction: a negative sign means as one variable rises, the other tends to fall; a positive sign means they move together. The magnitude indicates strength: values near 1 or -1 show a strong relationship, while values near 0 show a weak one. A value of -0.8 indicates a strong negative correlation — the variables tend to move in opposite directions quite closely, but not perfectly. For example, as price rises, quantity demanded typically falls. This is not zero correlation, not positive, and not perfect (which would be -1).