CORRELATION

Correlation is a statistical tool which studies the relationship between two variables.
Correlation Analysis involves various methods and techniques used for studying and
measuring the extent of the relationship between two variables.

The correlation expresses rates or relationship between the groups of items but not
between the individual items. The relationship between the two variables is not
functional.

In other words, correlation analysis is a statistical procedure by which we can

determine the degree of association or relationship between two or more variables. The
amount of correlation in a sample (of data) is measured by the sample coefficient of
correlation, which is, generally, denoted by r or by ρ

The relationship between two variables such that a change in one variable results in a
positive or negative change in the other variable and also a greater change in one
variable results in corresponding greater or smaller change in the other variable is
known as correlation.

When is it used?

Where there is a linear relationship between two variables there is said to be a

correlation between them.

Examples are height and weight in children, or socio-economic class and mortality.

The strength of that relationship is given by the “correlation coefficient”

The coefficient of correlation between the two variables x, y is generally denoted by r or

or rxy or r (x, y) or ρ (x, y) or ρ

PROPERTIES OF COEFFICIENT OF CORRELATION

1. It is a measure of the closeness of a fit in a relative sense.

2. Correlation coefficient lies between -1 and + 1, i.e., - 1  r  1.
3. The correlation is perfect and positive if r = 1 and it is perfrct and negative if r = -1
4. If r = 0, then there is no correlation between the two variables and thus the
variables are said to be independent
5. The correlation coefficient is a pure number and is not affected by a change of
origin and scale in magnitude.
6. It is a relative measure of association between two or more variables

Positive Correlation:The correlation is said to be positive when the variables move

together in the same direction. When the income rises, consumption also rises. When
income falls, consumption also falls. Sale of ice-cream and temperature move in the
same direction.
 (a) Positive correlation (b) Perfect positive correlation

Negative Correlation: The correlation is negative when they move in opposite

directions.

When the price of apples falls its demand increases.

When the prices rise its demand decreases. When you spend more time in studying,
chances of your failing decline. When you spend less hours in study, chances of your
failing increase. These are instances of negative correlation. The variables move in
opposite direction.

When all points lie exactly on a straight line with a opposite directions perfect Negative
correlation

(C) Negative correlation (d) Perfect negative correlation

No Correlation:
When there is no recognizable relationship between two variables. Example: Hair length
and intelligence level.
Simple Correlation

Simple correlation measures the strength and direction of the relationship between two
variables. It's often quantified using the correlation coefficient, denoted by r,

which ranges from -1 to 1:

• r=1: Perfect positive correlation (as one variable increases, the other increases
proportionally).

• r= -1: Perfect negative correlation (as one variable increases, the other decreases
proportionally).

• r=0: No correlation.

Example: Consider the relationship between daily exercise (in hours) and calorie burn.
If more hours of exercise consistently result in an increased number of calories burned,
we may find a positive correlation between these two variables.

Multiple Correlation

Multiple correlation measures the strength of the relationship between one dependent
variable and two or more independent variables. It's a more complex analysis that
considers how several factors together influence a given outcome. The multiple
correlation coefficient, denoted by RR, indicates how well the independent variables
predict the dependent variable.

Example: In a health study, researchers might examine the relationship between blood
pressure (dependent variable) and multiple factors like age, weight, and sodium intake
(independent variables). The analysis would reveal how these factors together impact
blood pressure.

Linear Correlation:
This occurs when changes in one variable always have a consistent effect on the other
variable. The graph forms a straight line.
Example:
X = 1, 2, 3, 4, 5, 6, 7, 8
Y = 5, 7, 9, 11, 13, 15, 17, 19
Here, the relationship can be described by the formula Y=3+2X showing a steady
pattern.

Non-Linear Correlation:
This happens when changes in one variable do not have a consistent effect on the other.
The graph will curve or take other shapes instead of forming a straight line.

X = 1, 2, 3, 4, 5, 6, 7, 8
Y = 1, 4, 9, 16, 25, 36, 49, 64

In this example, Y=X2

The relationship is non-linear because the change in Y does not follow a constant ratio
with the change in X.

Methods of studying correlation

1. Scatter Diagram method: A scatter diagram is a simple way to visually examine the
relationship between two variables without doing any complex calculations. In this
method, data points for the two variables are plotted on a graph. The pattern formed by
these points is called a scatter diagram.

Key points:

1. If the points form a straight line, the relationship is perfect (correlation is 1).

2. If the points are spread out but somewhat follow a line, the correlation is
moderate.

3. If the points are scattered randomly, the correlation is weak.

4. When points closely follow a straight line, the relationship is linear.

2. Karl Pearson’s Coefficient of correlation;

What is Karl Pearson's Coefficient of Correlation?

It measures the strength and direction of the linear relationship between two
variables (X and Y).

The result is a number (r) between -1 and +1.

The numerical value by which we measure the strength of linear relationship

between two or more variables is called correlation coefficient.
 Let, (𝑥1 ,𝑦1 ), (𝑥2 , 𝑦2 )………..(𝑥𝑛 , 𝑦𝑛 ) be the pairs of n observations. Then the
correlation coefficient between x and y is denoted by 𝑟𝑥𝑦 and defined as,
𝑐𝑜𝑣(𝑥,𝑦)
r= 𝜎𝑥 𝜎𝑦

Assumptions of Pearson’s Correlation Coefficient 

There is linear relationship between two variables, i.e. when the two variables are
plotted on a scatter diagram a straight line will be formed by the points. Cause and
effect relation exists between different forces operating on the item of the two variable
series.

Correlation Coefficient 1 = Perfect positive correlation

0.7  c < 1 = Strong positive correlation

0.4  c < 0.7 = Fairly positive correlation

0 < c < 0.4 = Weak positive correlation

0 = No correlation

0 > c > -0.4 = Weak negative correlation

-0.4  c > -0.7 = Fairly negative correlation

-0.7  c < -1 = Strong negative correlation

-1 = Perfect negative correlation

3. Spearman’s Rank Correlation

Rank correlation is used when it is difficult to measure the values of variables

numerically, but they can be ranked. It helps to find the relationship between variables
that are qualitative or ordinal, like beauty, honesty, intelligence, etc. Spearman's Rank
Correlation Coefficient (denoted by R) is used in such cases, introduced by Spearman
in 1904.

Formula for Spearman's Rank Correlation Coefficient (R):

When there are no ties (i.e., no duplicate ranks), the formula to calculate Spearman's
Rank Correlation Coefficient is:
6 ∑ 𝑑2
R =1−𝑛(𝑛2 −1)

*PRACTICE THE MATH THAT WAS DONE IN CLASS