Testing the Significance of the

Correlation Coefficient
Learning Outcomes
Calculate and interpret the correlation coefficient

The correlation coefficient, r, tells us about the strength and direction

of the linear relationship between x and y. However, the reliability of the
linear model also depends on how many observed data points are in
the sample. We need to look at both the value of the correlation
coefficient r and the sample size n, together.

We perform a hypothesis test of the “significance of the correlation

coefficient” to decide whether the linear relationship in the sample
data is strong enough to use to model the relationship in the
population.

The sample data are used to compute r, the correlation coefficient for
the sample. If we had data for the entire population, we could find the
population correlation coefficient. But because we have only have
sample data, we cannot calculate the population correlation coefficient.
The sample correlation coefficient, r, is our estimate of the unknown
population correlation coefficient.

The symbol for the population correlation coefficient is ρ, the

Greek letter “rho.”
ρ = population correlation coefficient (unknown)
r = sample correlation coefficient (known; calculated from sample
data)
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 The hypothesis test lets us decide whether the value of the population
correlation coefficient
ρ is “close to zero” or “significantly different from zero”. We decide this
based on the sample correlation coefficient r and the sample size n.

If the test concludes that the correlation coefficient is significantly

different from zero, we say that the correlation coefficient is
“significant.”
Conclusion: There is sufficient evidence to conclude that there is a
significant linear relationship between x and y because the correlation
coefficient is significantly different from zero. What the conclusion
means: There is a significant linear relationship between x and y. We
can use the regression line to model the linear relationship between x
and y in the population.

If the test concludes that the correlation coefficient is not

significantly different from zero (it is close to zero), we say that
correlation coefficient is “not significant.”

Conclusion: “There is insufficient evidence to conclude that there is a

significant linear relationship between
x and y because the correlation coefficient is not significantly different
from zero.” What the conclusion means: There is not a significant linear
relationship between x and y. Therefore, we CANNOT use the
regression line to model a linear relationship between x and y in the
population.

Note

If r is significant and the scatter plot shows a linear trend, the line
can be used to predict the value of y for values of x that are within
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 the domain of observed x values.
If r is not significant OR if the scatter plot does not show a linear
trend, the line should not be used for prediction.
If r is significant and if the scatter plot shows a linear trend, the line
may NOT be appropriate or reliable for prediction OUTSIDE the
domain of observed x values in the data.

Performing the Hypothesis Test

Null Hypothesis: H0: ρ = 0
Alternate Hypothesis: Ha: ρ ≠ 0

What the Hypotheses Mean in Words

Null Hypothesis H0: The population correlation coefficient IS NOT

significantly different from zero. There IS NOT a significant linear
relationship(correlation) between x and y in the population.
Alternate Hypothesis Ha: The population correlation coefficient IS
significantly DIFFERENT FROM zero. There IS A SIGNIFICANT
LINEAR RELATIONSHIP (correlation) between x and y in the
population.

Drawing a Conclusion

There are two methods of making the decision. The two methods are
equivalent and give the same result.

Method 1: Using the p-value

Method 2: Using a table of critical values
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 In this chapter of this textbook, we will always use a significance level
of 5%, α = 0.05

Note

Using the p-value method, you could choose any appropriate

significance level you want; you are not limited to using α = 0.05. But
the table of critical values provided in this textbook assumes that we
are using a significance level of 5%, α = 0.05. (If we wanted to use a
different significance level than 5% with the critical value method, we
would need different tables of critical values that are not provided in
this textbook.)

Method 1: Using a p-value to make a decision

To calculate the p-value using LinRegTTEST:

On the LinRegTTEST input screen, on the line prompt for β or ρ,

highlight “≠ 0”
The output screen shows the p-value on the line that reads “p =”.
(Most computer statistical software can calculate thep-value.)

If the p-value is less than the significance level (α = 0.05)

Decision: Reject the null hypothesis.

Conclusion: “There is sufficient evidence to conclude that there is
a significant linear relationship between x and y because the
correlation coefficient is significantly different from zero.”

If the p-value is NOT less than the significance level (α = 0.05)

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 Decision: DO NOT REJECT the null hypothesis.
Conclusion: “There is insufficient evidence to conclude that there
is a significant linear relationship between x and y because the
correlation coefficient is NOT significantly different from zero.”

Calculation Notes:

You will use technology to calculate the p-value. The following

describes the calculations to compute the test statistics and the
p-value:
The p-value is calculated using a t-distribution with n – 2 degrees
of freedom.

𝑟√𝑛 − 2
The formula for the test statistic is

𝑡=
√1 − 𝑟2
. The value of the test statistic, t, is shown in the computer or
calculator output along with the p-value. The test statistic t has
the same sign as the correlation coefficient r.
The p-value is the combined area in both tails.

An alternative way to calculate the p-value (p) given by LinRegTTest is

the command 2*tcdf(abs(t),10^99, n-2) in 2nd DISTR.

Method 2: Using a table of Critical Values to

make a decision
The 95% Critical Values of the Sample Correlation Coefficient Table
can be used to give you a good idea of whether the computed value of
is significant or not. Compare r to the appropriate critical value in the
table. If r is not between the positive and negative critical values, then
the correlation coefficient is significant. Ifr is significant, then you may
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 want to use the line for prediction.

Example

Suppose you computed r = 0.801 using n = 10 data points.df = n – 2 =

10 – 2 = 8. The critical values associated with df = 8 are -0.632 and +
0.632. If r < negative critical value or r > positive critical value, then r
is significant. Since r = 0.801 and 0.801 > 0.632, r is significant and the
line may be used for prediction. If you view this example on a number
line, it will help you.

r is not significant between -0.632 and +0.632. r = 0.801 > +0.632.

Therefore, r is significant.

try it

For a given line of best fit, you computed that r = 0.6501 using n = 12
data points and the critical value is 0.576. Can the line be used for
prediction? Why or why not?

If the scatter plot looks linear then, yes, the line can be used for
prediction, because r > the positive critical value.

Example

Suppose you computed r = –0.624 with 14 data points. df = 14 – 2 = 12.

The critical values are –0.532 and 0.532. Since –0.624 < –0.532, r is
significant and the line can be used for prediction
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 r = –0.624-0.532. Therefore, r is significant.

try it

For a given line of best fit, you compute that r = 0.5204 using n = 9
data points, and the critical value is 0.666. Can the line be used for
prediction? Why or why not?

No, the line cannot be used for prediction, because r < the positive
critical value.

Example 3

Suppose you computed r = 0.776 and n = 6. df = 6 – 2 = 4. The critical

values are –0.811 and 0.811. Since –0.811 < 0.776 < 0.811, r is not
significant, and the line should not be used for prediction.

–0.811 < r = 0.776 < 0.811. Therefore, r is not significant.

Try it

For a given line of best fit, you compute that r = –0.7204 using n = 8
data points, and the critical value is = 0.707. Can the line be used for
prediction? Why or why not?

Yes, the line can be used for prediction, because r < the negative
critical value.
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 Example

Suppose you computed the following correlation coefficients. Using the

table at the end of the chapter, determine if r is significant and the line
of best fit associated with each r can be used to predict a y value. If it
helps, draw a number line.

1. r = –0.567 and the sample size, n, is 19. The df = n – 2 = 17. The

critical value is –0.456. –0.567 < –0.456 so r is significant.
2. r = 0.708 and the sample size, n, is nine. The df = n – 2 = 7. The
critical value is 0.666. 0.708 > 0.666 so r is significant.
3. r = 0.134 and the sample size, n, is 14. The df = 14 – 2 = 12. The
critical value is 0.532. 0.134 is between –0.532 and 0.532 so r is
not significant.
4. r = 0 and the sample size, n, is five. No matter what the dfs are, r =
0 is between the two critical values so r is not significant.

try it

For a given line of best fit, you compute that r = 0 using n = 100 data
points. Can the line be used for prediction? Why or why not?

No, the line cannot be used for prediction no matter what the sample
size is.

Assumptions in Testing the Significance of the

Correlation Coefficient
Testing the significance of the correlation coefficient requires that
certain assumptions about the data are satisfied. The premise of this
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 test is that the data are a sample of observed points taken from a larger
population. We have not examined the entire population because it is
not possible or feasible to do so. We are examining the sample to draw
a conclusion about whether the linear relationship that we see between
x and y in the sample data provides strong enough evidence so that we
can conclude that there is a linear relationship between x and y in the
population.

The regression line equation that we calculate from the sample data
gives the best-fit line for our particular sample. We want to use this
best-fit line for the sample as an estimate of the best-fit line for the
population. Examining the scatterplot and testing the significance of
the correlation coefficient helps us determine if it is appropriate to do
this.

The assumptions underlying the test of significance are:

There is a linear relationship in the population that models the

average value of y for varying values of x. In other words, the
expected value of y for each particular value lies on a straight line
in the population. (We do not know the equation for the line for the
population. Our regression line from the sample is our best
estimate of this line in the population.)
The y values for any particular x value are normally distributed
about the line. This implies that there are more y values scattered
closer to the line than are scattered farther away. Assumption (1)
implies that these normal distributions are centered on the line: the
means of these normal distributions of y values lie on the line.
The standard deviations of the population y values about the line
are equal for each value of x. In other words, each of these normal
distributions of yvalues has the same shape and spread about the
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 line.
The residual errors are mutually independent (no pattern).
The data are produced from a well-designed, random sample or
randomized experiment.

The y values for each x value are normally distributed about the line
with the same standard deviation. For each x value, the mean of the y
values lies on the regression line. More y values lie near the line than
are scattered further away from the line.

Concept Review

𝑦^ = 𝑎 + 𝑏𝑥
Linear regression is a procedure for fitting a straight line of the form

to data. The conditions for regression are:

Linear: In the population, there is a linear relationship that models

the average value of y for different values of x.
Independent: The residuals are assumed to be independent.
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 Normal: The y values are distributed normally for any value of x.
Equal variance: The standard deviation of the y values is equal for
each x value.
Random: The data are produced from a well-designed random
sample or randomized experiment.

The slope b and intercept a of the least-squares line estimate the slope
β and intercept α of the population (true) regression line. To estimate
the population standard deviation of y, σ, use the standard deviation of
the residuals, s.

𝑆𝑆𝐸
𝑠=
√𝑛 − 2
The variable ρ (rho) is the population correlation coefficient.

To test the null hypothesis H0: ρ = hypothesized value, use a linear

regression t-test. The most common null hypothesis is H0: ρ = 0 which
indicates there is no linear relationship between x and y in the
population.

The TI-83, 83+, 84, 84+ calculator function LinRegTTest can perform
this test (STATS TESTS LinRegTTest).

Formula Review

𝑦^ = 𝑎 + 𝑏𝑥
Least Squares Line or Line of Best Fit:

where a = y-intercept, b = slope

Standard deviation of the residuals:

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 𝑆𝑆𝐸
𝑠=
√𝑛 − 2

where

SSE = sum of squared errors

n = the number of data points

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