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Role of Scatter Diagrams in Correlation

A scatter diagram graphs the relationship between two variables, with one on each axis, to determine their correlation. The scatter diagram plays an essential role in determining the nature of the coefficient of correlation. Specifically, it shows whether the correlation is perfectly positive (points fall along an upward sloping line), perfectly negative (points fall along a downward sloping line), or somewhere in between. A tighter grouping of points indicates a stronger correlation, while widely scattered points show little to no correlation.

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6 views4 pages

Role of Scatter Diagrams in Correlation

A scatter diagram graphs the relationship between two variables, with one on each axis, to determine their correlation. The scatter diagram plays an essential role in determining the nature of the coefficient of correlation. Specifically, it shows whether the correlation is perfectly positive (points fall along an upward sloping line), perfectly negative (points fall along a downward sloping line), or somewhere in between. A tighter grouping of points indicates a stronger correlation, while widely scattered points show little to no correlation.

Uploaded by

bishal luitel
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ASSIGNMENT OF BUSINESS STATISTICS

AND RESEARCH METHODOLOGY


UNIT-5

SUBMITTED BY:  BISHAL LUITEL           SUBMITTED TO: DHARMA RAJ BHATTARAI

21 BATCH                                                      Subject Teacher


ST

TICINO                                                            Business Statistics and Research Methodology

Briefly explain the role of scatter diagram in determining the nature of


the coefficient of correlation.
Scatter Diagrams are convenient mathematical tools to study the
correlation between two random variables. According to the PMBOK Guide 6th
edition, a scatter diagram is, “a graph that shows the relationship between two
variables. Scatter diagrams can show a relationship between any element of a
process, environment, or activity on one axis and a quality defect on the other
axis.”
The scatter diagram is used to find the correlation between these two
variables, how they are related. After determining the correlation, then we can
predict the behavior of the dependent variable based on the measure of the
independent variable. The role of scatter diagram is very essential in determining
the nature of the coefficient of correlation because the scatter diagram graphs
pairs of numerical data, with one variable on each axis, to look for a relationship
between them. If the variables are correlated, the points will fall along a line or
curve. The better the correlation, the tighter the points will hug the line.
The nature of coefficient of correlation can be determined with the
essential role of scatter diagram through following ways:

 If all the points lie on a straight line rising from the lower left-hand corner
to upper right-hand corner, then the correlation is said to be perfectly
positive correlation Where the value of r=1.
 If all the points lie on a straight line falling from the upper left-hand corner
to lower right-hand corner then the correlation is said to be perfectly
negative correlation, Where the value of r=-1.
 If all the points lie on a narrower band rising form the lower left-hand
corner to upper right-hand corner, then the correlation is said to be high
degree of positive correlation.
 If all the points lie on a narrower band falling from the upper left-hand
corner to lower right-hand corner, then the correlation is said to be high
degree of negative correlation.
 If all the points lie on a narrower band falling from the upper left-hand
corner to lower right-hand corner, then the correlation is said to be high
degree of negative correlation.
 If all the points are widely scattered, then there is low degree of
correlation.
 If the plotted point does not exhibit any definite trend or pattern, then
there is no correlation

FIG: Scatter Plots (Diagram)

Figure Source: [Link]


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References
[Link]
[Link]
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