Definition

\[\mathrm{cov}(X,Y)=\mathbb{E}\left[(X-\mathbb{E}[X])(Y-\mathbb{E}[Y])\right]\]

Properties

\[\mathrm{cov}(X,X)=\mathrm{var}(X)\] \[\mathrm{cov}(X,Y)=\mathbb{E}[XY]-\mathbb{E}[X]\mathbb{E}[Y]\]

The Correlation Coefficient

\[\rho(X,Y)=\dfrac{\mathrm{cov}(X,Y)}{\sigma_X\sigma_Y}\] \[-1\leq\rho\leq 1\]