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Correlation
6th September, 2013 Group No.11
Introduction
Correlation is technique used to measure relationship between to variables or more Correlation analysis shows us how to determine the nature & strength of relationship between two variables
Correlation Range
Correlation lies between +1 to -1 Zero correlation Neutral (No relationship ) -1 correlation Perfect -ve (Very Weak) +1 correlation Perfect +ve (Very Strong)
Types of Correlation
Correlation
Direct (Quantitative) Eg. Price Demand Ads Sales Karl Pearsons Coeff
example
student
1 2
x
22500 24025
y
2025 2500
xy
6750 7750
3
4 5 sum
160
165 170 800
55
60 65 275
25600
27225 28900 128250
3025
3600 4225 15375
8800
9900 11050 44250
Application
( )( )
[ " (" ) )][ ( )] = = 1250
INTERPRETATION
r= 0.5 r=0.6 r=0.8 r=0.9/more moderate +ve correlation good +ve correlation strong +ve correlation. spurious +ve correlation.
English 56
75
45
71
61
64
58
80
76
61
Maths
66
70
40
60
65
56
59
77
67
63
RANK
English (mark) 56 75 45 Maths (mark) 66 70 40 Rank (English) 9 3 10 Rank (maths) 4 2 10
71
61 64 58
60
65 56 59
4
6.5 5 8
7
5 9 8
80
76 61
77
67 63
1
2 6.5
1
3 6
56
75 45 71 62 64 58 80 76 61
66
70 40 60 65 56 59 77 67 63
9
3 10 4 6.5 5 8 1 2 6.5
4
2 10 7 5 9 8 1 3 6
5
1 0 3 1 4 0 0 1 1
25
1 0 9 1 16 0 0 1 1
We then substitute this into the main equation with the other information as follows:
Interpretation
In a sample it is denoted by or rs and lies between: -1< <1
00-.19 very weak 20-.39 weak 40-.59 moderate 60-.79 strong 80-1.0 very strong
As the ocean level falls, the fish population size decreases. Heavy traffic correlates with the time of day. There is heavy traffic between 8:00 AM and 9:00 AM and again between 4:30 PM and 6:00 PM An increase in the rate of inflation causes goods to be more difficult to purchase, all other factors remaining unchanged;
Application 1:
The local ice cream shop keeps track of how much ice cream they sell versus the temperature on that day, here are their figures for the last 12 days:
Ice Cream Sales vs Temperature Temperature in Degrees 14.2 15.2 22.1 25.1 17.2 Ice Cream Sales(in thousand) 14 22 34.5 40.6 27
You can easily see that warmer weather leads to more sales, the relationship is good but not perfect.
Correlation is 0.968721
Application 2:
The following table gives the weights and waist sizes of 10 friends:
Weight(in kg) 87 65 52 94 87 79 Waist(in cm) 101 71 62 113 88 87
Correlation is 0.947286 We can conclude that there is good correlation between the weight and waist of the people