I want to use Excel to generate a random correlated $Y$ from a known $X$. From another thread, I found the equation $Y = r\cdot X + E$, where $X$ is standardized and $E$ is a random variable from normal distribution having mean $0$ and $\sigma = \sqrt{(1-r^2)}$. I assume $r$ is the correlation coefficient found using Excel's CORREL
function. I also assume I can calculate $E$ by using Excel's NORMDIST
function.
Are my assumptions correct? If I have a known $X$, how do I "standardize" $X$?
Thanks for any help.