39/2020 STATISTICAL ASSISTANT GRADE II/

STATISTICAL INVESTIGATOR GRADE II TOPIC: CORRELATION

Definition IV. Partial correlation: - Two or more

“Correlation analysis as an attempt to determine variables are recognized and two
the degree of relationship between variables”- variables are considered for study by
Ya-Lun-Chou keeping other variables as constant.
V. Multiple correlation: - Three or more
“Correlation analysis deals with the association variables are considered for study.
between two or more variables” VI. Linear correlation: - If the amount of
-Simpson&Kafka change in one variable follows a constant
“Correlation means that between two series or ratio change of other variable.
groups of data there exists some casual VII. Nonlinear correlation:- If the amount of
relation”.-W.L.King change in one variable does not bear a
constant ratio to the amount of change in
“When the relationship is of a quantitative other variable.
nature, the approximate statistical tool for Degree of correlation
discovering and measuring the relationship and I. Perfect positive correlation:- If an
expressing it in a brief formula is known as increase(decrease) in the value of one
correlation “-Croxton&Cowden variable is followed by the same
proportion of increase(decrease) in other
Correlation coefficient related variables.
Coefficient of correlation is a relative measure II. Perfect negative correlation: - If an
showing the degree of relationship between two increase (decrease) in value of one
variable. variable is followed by the same
proportion of decrease (increase) in other
Types of Correlation variable.
I. Positive: - If the two variables are moving III. Zero correlation: - If there is no correlation
together in same direction then the between variables.
correlation is positive Methods for studying correlation
II. Negative :- If two variables are moving in I. Scatter diagram
opposite direction then the correlation is Scatter diagram is a graphical method of
negative studying correlation. it also known as
III. Simple correlation: - When only two scatter plot
variables are studied it is called simple.
Eg:- relationship between Price and
Supply of a product
 Probable error
Difference occurring due to taking samples from the means
or population
II. Karl person’s correlation
coefficient(r):- 1−𝑟 2
Pr =0.6745
r( x, y)= 𝑐𝑜𝑣(𝑥,𝑦)
𝜎𝑥 𝜎𝑦
√𝑛

III. Rank correlation

1 To study the correlation between attributes,
𝑐𝑜𝑣 (𝑥, 𝑦) = ∑(𝑥 − 𝑥̅ )(𝑦 − 𝑦̅) Developed by Charls Edward Spearman
𝑛
1
6 ∑ 𝐷2
𝜎𝑥 =√ (𝑥 − 𝑥̅ )2 𝑅 =1− 3
𝑛 𝑁 −𝑁
1
𝜎𝑦 =√ (𝑦 − 𝑦̅)2 IV. Concurrent deviation Method
𝑛 If we want to study the correlation between two series is a
The value of coefficient of correlation (r) casual manner and no precision is required.
always takes values from -1 to +1
ie; -1≤r≤+1 2𝐶−𝑛
Properties
𝑟𝑐 = ±√± { }
𝑛
1. Correlation coefficient takes
any values from -1 to +1 C=number of concurrent deviations
2. i. Magnitude of coefficient of n= number of pairs of observations compared
correlation is unaltered if a Note:-
constant added (subtracted) 2C>N; r is positive
from the value of one variable 2C<N ; r is negative
(both). Coefficient of determination
ii. Magnitude of coefficient of Coefficient of determination is the square of coefficient of
correlation is unaltered if the correlation. Thus coefficient of correlation is r2. It is more
value of one variable (both) useful to measure the percentage variation in the dependent
are multiplied (divided) by a variable which is accounted for by the independent variable.
constant. Eg;- if r=0.7 the coefficient of determination will be 0.49; this
3. Correlation coefficient is symmetric means 49% of the variation in the dependent variable has
with respect to variable been explained by the independent variable.
ie, r(x, y)=r(y, x) Coefficient of non-determination
The ratio of unexplained variance to total variance is called
4. Correlation coefficient between two
coefficient of determination. Denoted by k2 ; k2 =1-r2
independent variables is zero. But the
converse is not true.