The skill of weather and climate forecast systems is often assessed by calculating the correlation coefficient between past forecasts and their verifying observations. Improvements in forecast skill can thus be quantified by correlation differences. The uncertainty in the correlation difference needs to be assessed to judge whether the observed difference constitutes a genuine improvement, or is compatible with random sampling variations. A widely used statistical test for correlation difference is known to be unsuitable, because it assumes that the competing forecasting systems are independent. In this paper, appropriate statistical methods are reviewed to assess correlation differences when the competing forecasting systems are strongly correlated with one another. The methods are used to compare correlation skill between seasonal temperature forecasts that differ in initialization scheme and model resolution. A simple power analysis framework is proposed to estimate the probability of correctly detecting skill improvements, and to determine the minimum number of samples required to reliably detect improvements. The proposed statistical test has a higher power of detecting improvements than the traditional test. The main examples suggest that sample sizes of climate hindcasts should be increased to about 40 years to ensure sufficiently high power. It is found that seasonal temperature forecasts are significantly improved by using realistic land surface initial conditions.