UNIT 2 CONTENT
Correlation
TYPES OF CORRELATION
• In correlation, when values of one variable increase with the
increase in another variable, it is a positive correlation.
• If the values of one variable increase with the decrease in
another variable, then it would be a negative correlation.
• When there is no change in a variable with any change in
another variable. In this case, it is defined as no correlation.
Examples
■ Positive ■ Negative
relationships relationships:
■ water ■ alcohol
consumption and consumption and
temperature. driving ability.
■ study time and ■ Price & quantity
grades. demanded
Scatter Diagram Method
■ Scatter Diagram is a graph of
observed plotted points where
each points represents the
values of X & Y as a coordinate.
It portrays the relationship
between these two variables
Types of Correlation
A perfect positive correlation r=1
Weigh
Weigt
ht
Weig
of B A linear
htof
A relationship
Heig
Heig Heig ht
ht ht
of A of B
High Degree of positive
correlation
■ Positive
relationship r = +.80
Weig
ht
Heig
ht
Degree of correlation
■ Moderate Positive
Correlation
r=+
0.4
Shoe
Size
Weig
ht
Degree of correlation
(r)
r= r=
+.80 +.60
r= r=
+.40 +.20
Degree of correlation
■ Perfect Negative Correlation
r = -1.0
TV
watching per
week
Exam
score
Degree of correlation
■ Moderate Negative
Correlation r = -.80
TV
watchi
ng per
week
Exam
score
Degree of correlation
■ Weak negative
Correlation
Sho
r=-
e 0.2
Size
Weig
ht
Degree of correlation
■ No Correlation (horizontal
line)
r = 0.0
IQ
Heig
ht
Disadvantage of scatter diagram
Can not adopt the an exact
degree of correlation
COEFFICIENT OF
CORRELATION
Coefficient of Determination
■ The convenient way of interpreting the
value of correlation coefficient is to use
of square of coefficient of correlation
which is called Coefficient of
Determination.
■ The Coefficient of Determination = r2.
■ Suppose: r = 0.9, r2 = 0.81 this would
mean that 81% of the variation in the
dependent variable has been explained
Coefficient of Determination
■ The maximum value of r2 is 1 because it
is possible to explain all of the
variation in y but it is not possible to
explain more than all of it.
■ Coefficient of Determination =
Explained variation / Total
variation
Coefficient of Determination: An example
■ Suppose: r = 0.60
r = 0.30 It does not mean that
the first correlation is twice as strong
as the second the
‘r’ can be understood by computing the
value of r2 .r = 0.60
Whe r2 = 0.36 -----(1)
n
This implies that in the first=case
r = 0.30 r 2
0.0936%
-----(2)
of
the total variation is explained
whereas in second case
Additionally, calculate the Coefficient of Determination and
provide your comments on the results
Example:
Find Karl Pearson’s coefficient of correlation form the
following data:Additionally, calculate the Coefficient of Determination and provide
your comments on the results
Wages 100 101 102 102 100 99 97 98 96 95
Cost of 98 99 99 97 95 92 95 94 90 91
living
• r = 0.847
• There is a high degree of relationship between the variables wage and cost of living
stated in the problem.
This data can be used to solve the Pearson correlation coefficient using the method where
no assumed average is taken for X and Y series. Additionally, calculate the Coefficient of
Determination and provide your comments on the results
Calculate the correlation coefficient for the following case taking 29 and 119 as
assumed means for fertilisers used and productivity (All the values given are in
tonnes):Additionally, calculate the Coefficient of Determination and provide your comments on the results
Fertiliser 15 18 20 24 30 35 40 50
used
Producti 85 93 95 105 120 130 150 160
vity
r = 0.9869
There exists a higher degree of relationship between the 2 variables fertilisers used and productivity stated in the problem .
Practice problems Additionally, calculate the Coefficient of Determination and
provide your comments on the results
Additionally, determine the correct correlation value after excluding the incorrect values.
Practice problems
COEFFICIENT OF
RANK
CORRELATION
Practice problems
LINES
OF
REGRESSION
THANKS