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Normalized Envelope Covariance

Correlation coefficient: Normalized covariance 0£ C £1

Definition:

Local-mean value: ER₁ = Ö(p / 2)

Variance: VAR R₁ = SIG² R₁ = (2 - p / 2)

Correlation: ER₁R₂ » p /2 [1 + r² / 4]

Thus, after some algebra,

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