Consider the following statements: 1. Covariance is based on squared deviations from the mean. 2. Covariance is a statistic with the same units as the underlying random variables. 3. Covariance describes how the variability in two variables X and Y are related to each other. Statement 2. is correct. Statements 2 and 3, are correct. Statements 1. and 2. are correct. Statement 3. is correct. All three statements are correct