Analysis

Correlation

By Ryan Silk & Lawrence Polatchek · Reviewed April 2026 · Options Trading Glossary

Statistical measure of co-movement between assets

What is Correlation?

Correlation A statistical measure ranging from -1 to +1 that describes how two assets move in relation to each other. A correlation of +1 means they move perfectly together; -1 means they move exactly opposite; 0 means no linear relationship. Understanding correlation is essential for hedging, diversification, and constructing multi-leg options portfolios.

Complete Definition

A statistical measure ranging from -1 to +1 that describes how two assets move in relation to each other. A correlation of +1 means they move perfectly together; -1 means they move exactly opposite; 0 means no linear relationship. Understanding correlation is essential for hedging, diversification, and constructing multi-leg options portfolios.

Example

SPY and QQQ have ~0.90 correlation. An SPY put hedge also partially hedges a QQQ position.

Related Terms

Beta Diversification Hedge Ratio

Written by

ApexVol Research Team

Quantitative options research

All calculations use live ORATS institutional data — the same source used by professional volatility desks.

Technical reviewer

Ryan Silk, ApexVol Founder

Reviewed for technical accuracy

10+ years trading options. Built ApexVol's pricing engine, Greeks model, and IV-rank methodology.

This guide is updated as market conditions and ORATS data change. Last revised 2026-05-12. How we research →

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