# Correlation and Covariance

This post will illustrate how to:

1. Create a correlation matrix of variables using the correlate command.
2. Display a correlation matrix as a covariance matrix.
3. Obtain the statistical significance of a correlation using the pwcorr command.

## Correlation Matrix

We’ll use the auto dataset for this tutorial.

sysuse auto, clear


We’ll create a correlation matrix of four variables – price, mpg, weight, and length.

correlation price mpg weight length


Note: We can shorten the correlation command to corr for convenience.

## Covariance Matrix

If we want to create of covariance matrix, we simply add the covariance option to the correlation command.

correlation price mpg weigh length, covariance


## Statistical Significance of a Correlation

The correlation command produces a clean correlation matrix (or covariance matrix with the covariance option). If we want to see the statistical significance of a correlation, we need to use the pwcorr command with the sig option.

pwcorr price mpg weight length, sig