Correlation is a systematic pattern that can be seen in the occurrences of events. A positive correlation means that as one value increases, the other value increases as well. A negative correlation means that as one value increases, the other value decreases. Correlation does not imply causation. Correlation values range from -1 to +1, and a value of zero indicates no correlation. During the business case stage, correlation is often assumed not to exist. This is a conservative assumption and tends to understate the aggregate risk value.
If correlation is pursued, correlation is typically assigned as follows:
Figure 14: Typical Correlations
| Low positive correlation | +0.3 |
| Medium positive correlation | +0.5 |
| High positive correlation | +0.7 |
| Low negative correlation | -0.3 |
| Medium negative correlation | -0.5 |
| High negative correlation | -0.7 |
The correlation values, if and when assigned, need to be loaded into the statistical software.