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E1.9: Why is correlation less than one? (Econometrics Math)

This video gives a formula for correlation in terms of covariances and variances. Then, I show why correlation is between -1 and 1, using a standard formula for variance of a linear combination of random variables. The video is useful to show how to manipulate variances of linear combinations and how to do some of the essential algebra involved in econometrics. This is part of my series of videos reviewing the mathematics and statistics prerequisites for econometrics.
Length: 06:12

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