Correlation or R Squared?

cbrough

Searched site for info re R-Squared. Couldnt find but did see site uses Correlation. Wonder why choose one over other? I thought R2 was the better stat. Thanks.

markd

I've never use R2 and correlation only rarely, but my understanding of it is, R2 relates the symbol to an index and tells you how much of the symbol's movement is attributable to the index movement, while correlation relates one symbol to another, not necessarily an index, and does not imply that one symbol's movement causes the other's. Again, that's just from a superficial acquaintance.