R-Squared in Finance

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Definition of “R-Squared in Finance” :

R-Squared in finance is a statistical measure that represents the proportion of the variance for a dependent variable that’s explained by an independent variable or variables in a regression model. In investing, it is a measure of how well a portfolio’s performance correlates with a benchmark index’s performance. The value of R-Squared ranges between 0 and 1, where 0 indicates no correlation and 1 indicates a perfect correlation.

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