• Describes two series that lack any relationship or interaction and therefore have a correlation coefficient close to zero.
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| ||Cluster analysis: A statistical technique that identifies clusters of stocks whose returns are highly correlated within each cluster and relatively Uncorrelated between clusters. Cluster analysis has identified groupings such as growth, cyclical, stable and energy stocks.|
| ||Idiosyncratic risk: Unsystematic risk or risk that is Uncorrelated to the overall market risk. In other words, the risk that is firm specific and can be diversified through holding a portfolio of stocks.|