# Correlation vs Causation

*Math & Statistics — Finicade finance glossary*

Correlation measures whether two variables move together; causation claims one produces the other. Two variables can correlate because one causes the other, because a third causes both, because the causation runs backwards, or by pure coincidence in a large enough search. Establishing causation needs an experiment or a credible identification strategy, which is why the phrase is a warning rather than a technique.

**Also known as:** correlation does not imply causation, causal inference

**Related terms:** [Correlation](https://finicade.com/glossary/correlation), [Endogeneity](https://finicade.com/glossary/endogeneity), [Omitted Variable Bias](https://finicade.com/glossary/omitted-variable-bias), [Instrumental Variable](https://finicade.com/glossary/instrumental-variable), [Simpson's Paradox](https://finicade.com/glossary/simpsons-paradox)

Source: https://finicade.com/glossary/correlation-vs-causation