0% found this document useful (0 votes)
70 views4 pages

UNIT-3 Correlation Is A Bivariate Analysis That Measures The Strength of Association

Uploaded by

HARSH ASWANI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
70 views4 pages

UNIT-3 Correlation Is A Bivariate Analysis That Measures The Strength of Association

Uploaded by

HARSH ASWANI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

UNIT-3

Correlation is a bivariate analysis that measures the strength of association


between two variables and the direction of the relationship. 

 In terms of the strength of relationship, the value of the correlation


coefficient varies between +1 and -1.  
 A value of ± 1 indicates a perfect degree of association between the two
variables.
   As the correlation coefficient value goes towards 0, the relationship
between the two variables will be weaker.  
 The direction of the relationship is indicated by the sign of the
coefficient; a + sign indicates a positive relationship and a – sign
indicates a negative relationship. 

According to King, ”correlation means that between two series or groups of


data there exists some casual connections.”

According to L.R.Connor,”If two or more quantities vary in sympathy so that


movements in the one tend to be accompanied by corresponding movements in
the other,then they are said to be correlated.”

Correlation analysis is a statistical method used to evaluate the strength of


relationship between two quantitative variables. A high correlation means that
two or more variables have a strong relationship with each other, while a weak
correlation means that the variables are hardly related.

Uses of Correlation Analysis

 It is used in presenting the average relationship between any two


variables through a single value of coefficient of correlation.
 It is used in reducing the range of uncertainty in matter of prediction.
 It is used in deriving the degree and direction of relationship within the
variables.

Significance/importance of correlation

 Helps in understanding economic behaviour.


 Estimating values of variables i.e. if variables are highly correlated then
we can find value of variable with the help of gives value of variable.
 Measures the degree of relation i.e. whether it is positive or negative.
Types of correlation

1. Positive and Negative Correlation: Whether the correlation between the


variables is positive or negative depends on its direction of change. The
correlation is positive when both the variables move in the same direction, i.e.
when one variable increases the other on an average also increases and if one
variable decreases the other also decreases. The correlation is said to be
negative when both the variables move in the opposite direction, i.e. when one
variable increases the other decreases and vice versa.
2. Simple, Partial and Multiple Correlation: Whether the correlation is
simple, partial or multiple depends on the number of variables studied. The
correlation is said to be simple when only two variables are studied. The
correlation is either multiple or partial when three or more variables are studied.
The correlation is said to be Multiple when three variables are studied
simultaneously. For eg., if we want to study the relationship between the yield
of wheat per acre and the amount of fertilizers and rainfall used, then it is a
problem of multiple correlations.

Whereas, in the case of a partial correlation we study more than two


variables, but consider only two among them that would be influencing
each other such that the effect of the other influencing variable is kept constant.
Such as, in the above example, if we study the relationship between the yield
and fertilizers used during the periods when certain average temperature
existed, then it is a problem of partial correlation.

3. Linear and Non-Linear (Curvilinear) Correlation: Whether the


correlation between the variables is linear or non-linear depends on
the constancy of ratio of change between the variables. The correlation is
said to be linear when the amount of change in one variable to the amount of
change in another variable tends to bear a constant ratio. For example, from
the values of two variables given below, it is clear that the ratio of change
between the variables is the same:

X: 10 20 30 40 50
Y: 20 40 60 80 100

The correlation is called as non-linear or curvilinear when the amount of change


in one variable does not bear a constant ratio to the amount of change in the
other variable. For example, if the amount of fertilizers is doubled the yield of
wheat would not be necessarily be doubled.
Degrees of Correlation

Through the coefficient of correlation, we can measure the degree or extent of


the correlation between two variables. On the basis of the coefficient of
correlation we can also determine whether the correlation is positive or negative
and also its degree or extent.

1. Perfect correlation: If two variables changes in the same direction and


in the same proportion, the correlation between the two is perfect
positive. According to Karl Pearson the coefficient of correlation in this
case is +1. On the other hand if the variables change in the opposite
direction and in the same proportion, the correlation is perfect negative.
its coefficient of correlation is -1. In practice we rarely come across these
types of correlations.

2. Absence of correlation: If two series of two variables exhibit no


relations between them or change in variable does not lead to a change in
the other variable, then we can firmly say that there is no
correlation or absurd correlation between the two variables. In such a
case the coefficient of correlation is 0.

3. Limited degrees of correlation: If two variables are not perfectly


correlated or is there a perfect absence of correlation, then we term the
correlation as Limited correlation. It may be positive, negative or zero but
lies with the limits ± 1.

Degrees Positive Negative


Absence of correlation ® Zero 0
Perfect correlation ® +1 -1
Limited correlation

 High degree ® + 0.75 to + 1 - 0.75 to -1

 Moderate degree ® + 0.25 to + 0.75 - 0.25 to - 0.75

 Low degree ® 0 to 0.25 0 to - 0.25

You might also like