In investment, the determination coefficient (usually R²) reflects the proportion of risk of the portfolio that is explained by the risk of the corresponding investment market or benchmark.

In statistics, the determination coefficient shows the proportion of the variation in the dependent variable that can be explained by the independent variables in a model. By definition, the R‑squared lies between zero (0%) and one (100%). A R‑squared of zero implies that the model cannot explain the dependent variable. A R‑squared of one indicates that the dependent variable can be fully explained by the model.