among other things. Corpus See: Principal Correction Reverse movement, usually downward, in the price of an individual stock, bond, commodity, or index. If prices have been rising on the market as a whole, and then fall dramatically, this is known as a correction within an upward trend. Antithesis of a technical rally. See: Dip, break. Correlation Statistical measure of the degree to which the movements of two variables (stock/option/convertible prices or returns) are related. See: Correlation coefficient. Correlation coefficient A standardized statistical measure of the dependence of two random variables, defined as the covariance divided by the product of the standard deviations of two variables. Correlation Dimension An estimate of the Fractal Dimension which measures the probability that two points chosen at random will be within a certain distance of each other, and examines how this probability changes as the distance is increased. White noise will fill its space since its components are uncorrelated, and its correlation dimension is equal to whatever dimension it is placed in. A dependent system will be held together by its correlations and retain its dimension whatever embedding dimension it is placed in, as long as it is greater than its fractal dimension. Correlation Integral The probability that two points are within a certain distance from one another. Used in the calculation of the correlation dimension. Correspondent A financial organization that performs services (acts as an intermediary) in a market for another organization that does not have access to that market. Correspondent bank Bank that accepts deposits of, and performs services for, another bank (called a respondent bank); in most cases, the two banks are in different cities. Cosigner A term referring to a person, other than the principal borrower, who signs for a loan. The cosigner(s) assumes equal liability for the loan. Cost The opposite of revenue. An expense that reflects the price of purchasing goods, services and financial instruments. A cash cost means that cash is given up today to the purchase. Also, the purchase price of an investment, which is compared to the sale proceeds to determine capital gain or loss. Cost accounting A branch of accounting that provides information to help the management of a firm evaluate production costs and efficiency. Cost and Freight (CFR) Seller is responsible for the payment of freight to carry goods to a named destination, as agreed with the buyer. This should be used with ocean shipments only, as the point where risk and responsibility pass from seller to buyer is the rail of the carrying vessel. Cost basis The original price of an asset, used to determine capital gains. Cost-benefit ratio The net present value of an investment divided by the investment's initial cost. Also called the profitability index. Cost of capital The required return for a capital budgeting project. Cost of carry Out-of-pocket costs incurred while an investor has an investment position. Examples include interest on long positions in margin account, dividend lost on short margin positions, and incidental expenses. Related: Net financing cost. Cost-of-carry market Applies to derivative products. Futures contractstrade in a "cost-of-carry market"