Chapter 3

Calculating Descriptive Statistics

CHAPTER 3 MAP
3.1 Measures of Central Tendency

3.2 Measures of Variability

3.3 Using the Mean and Standard Deviation Together

3.4 Working with Grouped Data

3.5 Measures of Relative Position

3.6 Measures of Association Between Two Variables

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 3.1 Measures of Central Tendency

Central tendency is a single value used to

describe the center point of a data set.

Measures of Central Tendency

Mean Median Mode

Weighted
Mean

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 The Mean
The mean, or average, is the most common
measure of central tendency.
• Calculate the mean by adding all the values in
a data set and then dividing the result by the
number of observations.

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 The Mean
Formula for the Sample Mean:
where = the sample mean
= the values in the sample

= the sum of all the data values

n = the number of data values

in the sample
Pronounced
“x-bar”

Sample size Observed values

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 The Mean
Formula for the Population Mean:

where = the population mean

(the Greek letter “mu”)

N = the number of data values

in the population

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 Calculating The Mean
Example: suppose a sample of size n = 5 gives
the following values:
6.2 7.1 4.8 9.0 3.3

The sample mean:

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 The Weighted Mean
A weighted mean allows you to assign more
weight to certain values and less weight to
others.
• Formula for the Weighted Mean:

where = the weight for each data value

= the sum of all the weights

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 Weighted Mean Example

Suppose you have already summarized the number

of days you worked each week for a sample of size
n = 20 weeks into this table:
# of days worked Frequency
3 4
4 7
5 6
6 3

• You worked 4 days the most and 6 days the least.

• To find an average number of days worked per week you need to
give more weight to 4 days and less weight to 6 days.
• The frequencies represent the weights.

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 Calculating the Weighted Mean
# of days worked Frequency
3 4
4 7
5 6
6 3
The weighted mean:

(4)(3) + (7)(4) + (6)(5) + (3)(6)

4+7+6+3

The average number of days you worked per week is 4.4 days.
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 Advantages and Disadvantages of Using
the Mean to Summarize Data
Advantages:
• Simple to calculate
• Summarizes the data with a single value
Disadvantages:
• With only a summary value you lose information about
the original data.
• Sample 1 with n = 3: 999, 1000, 1001 = 1000
• Sample 2 with n = 3: 0, 1000, 2000 = 1000
• Just knowing the mean does not help you know what the
underlying data looks like.
• The value of the mean is sensitive to outliers (values
that are much higher or lower than most of the data).

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 The Median

The median is the value in the data set for

which half the observations are higher and
half the observations are lower.
• First arrange the data in ascending order.
• Use an Index Point to determine the position of
the median in the data set.
Formula for the Index Point for the Median:
i = 0.5(n), where n = no. of data points.
Whenever the index point is not a whole number, round the
value up to the next highest whole number.
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 The Median
Example with sample of size n = 7:
21 27 27 28 34 45 50
• The index number is
i = 0.5(n) = 0.5(7) = 3.5

The index number is not a whole number so

round up to i = 4.
The median value is, therefore, in the fourth
position of our sorted data.
21 27 27 28 34 45 50
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 The Median

The median is not sensitive to outliers.

21 27 27 28 34 45 5000
• The median is still 28.

When there are an odd number of data

values, the median is always the middle value
in the data set.

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 The Median

When the index point is an even whole

number, the position of the median is halfway
between the index point (i) and the next
highest data point (the i + 1 position).

When there are an even number of data

values, the median is halfway between the
two middle values.

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 The Median
Example with sample of size n = 6:
145 157 170 182 204 209
• The index number is
i = 0.5(n) = 0.5(6) = 3

The index number is a whole number so the median

value is halfway between the third and fourth values in
the sorted data.
median = (170 + 182)/2 = 176

145 157 170 182 204 209

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 The Mode

The mode is the value that appears most often

in a data set.
• If no data value or category repeats more than
once, then we say that the mode does not exist.
• More than one mode can exist if two or more
values tie for most frequent.

The mode is a particularly useful way to

describe categorical data.

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 The Mode
Example with numerical data:
• Number of children per family in a sample of 24
families:
0,0,0,0,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,4,5

Number
of children Frequency
0 4 The value that
1 5 appears most
2 8 often is 2
0 1 2 3 4 5 (occurs 8 times),
3 4
4 2 so the mode = 2
children.
5 1
Mode = 2

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 The Mode

Example with categorical data:

Car Model Number in Parking Lot

Acura 3
Ford 5
BMW 1
Toyota 7

• The car that appears most often is Toyota (occurs 7

times), so the mode is the Toyota model.

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 Review Example

Prices for 5 homes have been collected

House Prices: ▪ Mean: ($3,000,000/5)
$2,000,000 = $600,000
500,000
300,000 ▪ Median: middle value of ranked
100,000 data
100,000
Sum 3,000,000
= $300,000
▪ Mode: appears most often
= $100,000

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 The Shapes of Frequency Distributions

Distribution Shape

Symmetric Skewed
Left- Right-
Skewed Skewed

Mean = Median Mean < Median Median < Mean

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 Using Excel to Calculate the
Mean, Median, and Mode
Values can be obtained using Excel functions or
the Data Analysis tool.
The data represent the
number of magazine
subscriptions from 12
households.

• If there is no mode, Excel displays “#N/A”

• If there is more than one mode, Excel will incorrectly display only
one mode, so use caution.
• Excel will not identify the mode for categorical data.
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 Using Excel to Calculate the
Mean, Median, and Mode
Values can be obtained using Excel functions or
the Data Analysis tool.

Choose the
“Descriptive
Statistics”
option…

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 Using Excel to Calculate the
Mean, Median, and Mode
Excel Descriptive Statistics output:

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 Which Measure of Central Tendency
Should You Use?
The mean is generally used as it is relatively easy
to determine and most widely understood by
people with little statistical training.
If outliers are present, the median is often used,
since the median is not sensitive to outliers
• For example, median home prices may be reported
for a region; it is less sensitive to outliers.

For categorical data, the mode is the only choice

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Advantages and Disadvantages

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3.2 Measures of Variability

Measures of variability show how much spread

is present in the data.

Measures of Variability

Range Variance Standard

Deviation
For a sample
For a sample
For a population
For a population

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 The Range
Simplest measure of variation
Difference between the highest value and the
lowest value in a data set

Range = Highest value – Lowest Value

Example: 1, 2, 4, 4, 6, 8, 8, 8, 8, 9, 11, 11, 12, 13

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Range = 13 - 1 = 12
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 The Range
Advantages:
• Easy to calculate and understand
Disadvantages:
• Only based on two numbers in the data set
(Ignores the way in which data are distributed)
• Sensitive to outliers
Example:

1, 2, 4, 4, 6, 8, 8, 8, 8, 9, 11, 11, 12, 13 Range = 12

1, 2, 4, 4, 6, 8, 8, 8, 8, 9, 11, 11, 12, 1000 Range = 999

Only one value changed - the range does not

accurately reflect the overall variability of the data
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 The Variance and Standard Deviation

• The sample variance is denoted by s2

Sample Variance Formula:

where = sample mean

n = sample size
= the difference between each
data value and the sample mean

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 Calculating the Sample Variance

Sample
Data (xi) : 4 6 8 9 11 12 12 18
n=8 Mean = = 10

The variance measures the

variability, or spread, of the
data points around the mean.

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 The Standard Deviation

The standard deviation is the square root of

the variance.
• Has the same units as the original data

Sample standard deviation formula:

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 Calculating the
Sample Standard Deviation
Sample
Data (xi) : 4 6 8 9 11 12 12 18
n=8 Mean = = 10

A measure of how far on

average each data value is
from the mean of the sample

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 Short-Cut Formulas for the Sample
Variance and Standard Deviation
Equivalent, but easier for hand calculations

Short-cut formula
for the sample
variance:

Short-cut formula for

the sample standard
deviation:

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 The Variance and Standard Deviation for
a Population
Used when the data set represents an entire
population rather than a sample from a
population

Population Variance Formula:

where = population mean

N = population size
= the difference between each data
value and the population mean

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 The Variance and Standard Deviation for
a Population
Used when the data set represents an entire
population rather than a sample from a
population
Population Standard
Deviation Formula:

where = population mean

N = population size
= the difference between each data
value and the population mean

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 Short-Cut Formulas for the Population
Variance and Standard Deviation
Equivalent, but easier for hand calculations

Short-cut formula
for the population
variance:

Short-cut formula for

the population
standard deviation:

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 Short-Cut Formula Example
Suppose there are six courses with the following student sizes:
34 25 41 32 25 29

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Using Excel to Calculate the Variance and
Standard Deviation
The Excel functions for the sample variance
and standard deviation are:
=VAR.S(data values) The letter S in
VAR.S and STDEV.S
=STDEV.S(data values) indicates “sample”.

The functions for the population variance and

standard deviation are:
=VAR.P(data values) The letter P in
VAR.P and STDEV.P
=STDEV.P(data values) indicates “population”.

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 Using Excel’s Data Analysis Option

From Excel’s Descriptive Statistics tool:

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3.3 Using the Mean and Standard
Deviation Together
The standard deviation is a common measure
of consistency in business applications, such as
quality control.
• The standard deviation measures the amount of
variability around the mean.
The standard deviation is affected by the scale
of the data.
• When sample means are very different, comparing
standard deviations can be misleading.

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 The Coefficient of Variation

The coefficient of variation, CV, measures the

standard deviation in terms of its percentage
of the mean.
• A high CV indicates high variability relative to the
size of the mean.
• A low CV indicates low variability relative to the
size of the mean.
A smaller coefficient of variation indicates
more consistency within a set of data values.

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 The Coefficient of Variation
Formula for the sample coefficient of variation:
where s = the sample standard deviation
= the sample mean

Formula for the population coefficient of variation:

where = the population standard deviation
= the population mean

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 Coefficient of Variation Example
Stock Price for Nike: Stock Price for Google:
Average price last year = $59.67 Average price last year = 1045.85

Standard deviation = $6.64 Standard deviation = $68.70

Coefficient of Variation:
Nike:

Although Google
Google: had a larger
deviation, it had
the more
consistent price.
Table 3.14, based on https://www.nasdaq.com/
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 The z-Score

The z-score identifies the number of standard deviations a

particular value is from the mean of its distribution.
• A z-score has no units.

The z-score is - zero for values equal to the mean

- positive for values above the mean
- negative for values below the mean

A data value that has a z-scores above +3 or below -3 is categorized

as an outlier (has a value far from the mean).

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 The z-Score
Formula for the population z-score
where = the data value of interest
= the population mean
= the population standard deviation

• Formula for the sample z-score:

where = the data value of interest

= the sample mean
= the sample standard deviation

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 z-Score Example
Find the z-score and interpret it.

Question: How far is 1230

from the sample mean of
788.4 (in standard
deviation increments)?

Answer: Our burger is slightly

more than one standard deviation
(1.23) above the sample mean.
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 The Empirical Rule
According to the empirical rule, if a distribution
follows a bell-shaped, symmetrical curve
centered around the mean, we would expect:
Approximately 68% of the Approximately 95% of the Approximately 99.7% of
values to fall within ± 1 values to fall within ± 2 the values to fall within ± 3
standard deviations from standard deviations from standard deviations from
the mean the mean the mean

-1 +1 -2 +2 -3 +3
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 Chebyshev’s Theorem
Chebyshev’s Theorem states that for any number z greater
than 1, the percent of the values that fall within z standard
deviations above and below the mean will be at least

• Applies regardless of the shape of the distribution

• When z = 2, at least 75% of the data values will fall within ±2 standard
deviations around the mean.
• When z = 3, at least 89% of the data values will fall within ±3 standard
deviations around the mean.
• When z = 4, at least 94% of the data values will fall within ±4 standard
deviations around the mean.

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 Expressing z-Scores in Terms of x
Formulas for expressing the z-score in terms of x:

For a population For a sample

Question: For a symmetric bell shaped population with a mean of 20 and a

standard deviation of 3, what interval will contain about 95% of all the values?

Answer: About 95% of the values are within ± 2 standard deviations:

About 95% of the values will

fall between 14 and 26.

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3.4 Working with Grouped Data

Suppose data has already been summarized by a

frequency distribution.
• The individual data values are no longer shown.
• Only grouped data is available.

To estimate the average for the frequency

distribution:
• Find the midpoint for each group.
(The midpoint is the halfway point in each
group.)
• Use the midpoint as a representative value for that
group.
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 The Mean of Grouped Data
The formula for the Sample Mean from Grouped
Data: where = the frequency for class i
= the midpoint for class i

= the total number of observations

k = the number of classes

• The mean is only an approximate value since the midpoint is
just an estimate of the value in each class.
Formula for the
population mean from
grouped data:
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 Example: The Mean of Grouped Data

Example An online merchant has collected the following

grouped data for the number of web pages viewed by a sample
of its customers:
Number of pages Frequency

1 to under 5 6
5 to under 9 12
9 to under 13 10
13 to under 17 4
The merchant would like to calculate the average number of
viewed pages.

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 Example: The Mean of Grouped Data
1. Find the midpoint for each class
Number of Midpoint Frequency
pages (mi) (fi)
1 to under 5 3 6 The midpoint is
5 to under 9 7 12 the halfway point
9 to under 13 11 10 in each group.
13 to under 17 15 4

2. Calculate the mean:

The average number of viewed pages is about 8.5.

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 The Variance and Standard Deviation of
Grouped Data
Formula for the Sample Variance: Grouped Data
where = the approximate sample mean
= the frequency for class i
= the midpoint for class i

= the total number of observations

k = the number of classes

Formula for the Population Variance: Grouped Data

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 Example: The Variance and Standard
Deviation of Grouped Data
Number of Midpoint Frequency
pages (mi) (fi)
1 to under 5 3 6
5 to under 9 7 12
9 to under 13 11 10
13 to under 17 15 4

Calculate the variance and standard deviation. Recall that = 8.5.

So the standard deviation is

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3.5 Measures of Relative Position

Measures of relative position compare the

position of one value in relation to other
values in the data set.
Measures of Relative Position

Percentiles Quartiles

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 Percentiles

Percentiles measure the approximate percentage

of values in the data set that are below the value
of interest.
The pth percentile of a data set (where p is any
number between 1 and 100) is the value that at
least p percent of the observations will fall below.
Examples:
• 20% of the data values are below the 20th percentile.
• 73% of the data values are below the 73rd percentile.

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 Percentiles
To find percentiles manually:
• Sort the data from lowest to highest
• Calculate the index point, i

where: p = the percentile of interest

n = the number of data values

If i is not a whole number, round i to the next whole number.

The ith position represents our value of interest.
If i is a whole number, the midpoint between the ith and i + 1
position is our value of interest.

Note: The index point, i, is not the value of the percentile, it

is the position of the percentile value in the ranked data.
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 Percentiles
Example: Miles per gallon were recorded for a sample
of 12 cars. The ranked values are shown below.

Question: What is the value of Position MPG Position MPG

60th percentile? 1 16.2 7 28.3
2 18.0 8 31.1
Answer:
3 20.5 9 32.0
4 20.5 10 35.8
5 22.8 11 38.0
6 26.4 12 42.5
Round up to get i = 8, so find the
60th percentile value in the 8th
position of the ranked data
The 60th percentile is 31.1 MPG.

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 Percentiles in Excel

Excel calculates percentiles using the

PERCENTILE.EXC function:
=PERCENTILE.EXC(array, k)
where:
array = the data range of interest
k = the percentile of interest between 0 and 1 inclusive

• Excel uses a slightly different technique to

calculate percentiles so Excel output may be
different than if you calculate manually.

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 Percentile Rank

The percentile rank identifies the percentile of

a particular value within a set of data.
Formula to find the approximate percentile
rank for a value x:

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 Percentile Rank
Question: What is the percentile rank Position MPG Position MPG
for the car with 35.8 MPG? 1 16.2 7 28.3
2 18.0 8 31.1
3 20.5 9 32.0
Answer: 35.8 is in the 79th percentile, 4 20.5 10 35.8
as calculated below. 5 22.8 11 38.0
6 26.4 12 42.5

9 of the 12 values are less than 35.8.

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 Quartiles

Quartiles split the ranked data into 4 equal

groups:
• The first quartile (Q1) is the value that constitutes
the 25th percentile.
• The second quartile (Q2) is the value that
constitutes the 50th percentile.
• Note that the second quartile (the 50th percentile) is
the median.
• The third quartile (Q3) is the value that
constitutes the 75th percentile.

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 Quartiles

Example: Find the first quartile

Sample Data: 11 12 13 16 16 17 18 21 22 22 25
(n = 11)

Q1 = 25th percentile, so find the index number i where n = 11 and p = 25:

so round up and use the value in the 3rd position: Q1 = 13

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 Quartiles

Quartiles can be found in Excel with the QUARTILE.EXE

function

=QUARTILE.EXC(array, quart)
where: array = the data range of interest
quart = 1, 2, or 3 (for the first, second, or third quartile)

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 Interquartile Range

The interquartile range, IQR, describes the

middle 50% of a range.
Find the IQR by subtracting the first quartile
from the third quartile.
IQR = Q3 – Q1

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 Box-and-Whisker Plots
A box-and-whisker plot is a graphical display showing
the relative position of the three quartiles as a box on a
number line.
It also shows the minimum and maximum values in the
data set and any outliers.
Example:

* *

Outliers Lowest 1st Median 3rd Highest value

value that is Quartile Quartile that is not an
not an outlier. outlier.
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 Outliers

Formulas for the Upper and Lower Limits of

Outliers

Upper Limit = Q3 + 1.5 (IQR)

Lower Limit = Q1 – 1.5 (IQR)

• Values beyond these limits are considered

outliers.

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 Constructing a Box-and-Whiskers Plot
• Determine the three quartiles.
• Draw a horizontal number line that spans the length of the
data values.
• Draw a box above the number line extending from Q1 to Q3,
with a center line at the median (Q2).
• Whiskers extend from the central box to the highest and
lowest values that are not outliers.
• If outliers exist in the data set, they are plotted with an
asterisk above the number line.

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Example: Constructing a Box-and-Whiskers Plot

n = 15

Index point for Q1:

Q3

Rounding up, Q1 is in the

Q2
fourth position in the
sorted data, so Q1 = 2.37

Q1
Similarly, we find
Q2 = 3.27
Q3 = 4.26

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Example: Constructing a Box-and-Whiskers Plot

• Note that the interquartile range is

IQR = Q3 – Q1 = 4.26 – 2.37 = 1.89

• Determine the upper and lower limits of outliers:

Upper Limit = Q3 + 1.5 (IQR) = 4.26 + 1.5(1.89) = 7.095
Lower Limit = Q1 – 1.5 (IQR) = 2.37 – 1.5(1.89) = -0.465

• The Great Smoky Mountain value of 11.31 is

above 7.095 so is labeled as an outlier. The
largest value that is not an outlier is 5.97.
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Example: Constructing a Box-and-Whiskers Plot

• Complete the box-and-whisker plot:

Min Q1 Q2 Q3 Max
0.59 2.37 3.27 4.26 5.97 11.31
(outlier)

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 The Five-Number Summary

A five-number summary consists of these five

values:
In the prior example:
• The minimum value Min = 0.59
• The first quartile Q1 = 2.37
• The second quartile Q2 = 3.27
• The third quartile Q3 = 4.26
• The maximum value Max = 11.31

• Note that outliers are included in the five-

number summary.

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3.6 Measures of Association Between
Two Variables
The goal of this section is to examine two
descriptive statistics that measure the linear
relationship between two variables.
Measures of Association
Between Two Variables

Sample Sample
Covariance Correlation
Coefficient

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 Sample Covariance
The sample covariance, sxy , measures the direction
of the linear relationship between two variables.
• A relationship is linear if the scatter plot of the independent and
dependent variables has a straight-line pattern.

The formula for the sample covariance is

where = the sample mean of the x variable
= the sample mean of the y variable
= the difference between each data value
and the sample mean for the x variable
= the difference between each data value
and the sample mean for the y variable
n = the sample size

The covariance is useful in describing the direction of the relationship

but not the strength of the relationship.

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 Correlation Coefficient

The sample correlation coefficient, rxy , measures

both the strength and direction of the linear
relationship between two variables.

The formula for the sample correlation coefficient is

where sxy = the sample covariance between
variables x and y
sx = the sample standard deviation for the x variable
sy = the sample standard deviation for the y variable

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 Example: Covariance and Correlation
Calculations
Example: A car dealer wants to examine the relationship
between the number of sales representatives and the
number of cars sold per week.
• Suppose a sample of 6 weeks is selected.
Week Number of Number of
sales cars sold
Two values are recorded representatives
for each week: 1 2 4
a) Number of sales 2 5 10
representatives 3 3 7
b) Number of cars sold 4 4 7
5 3 6
6 4 8
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 Example: Covariance and Correlation
Calculations

Scatterplot
Wee Number of Number of
k sales cars sold
representatives (y)
(x)
1 2 4
2 5 10
3 3 7
4 4 7
5 3 6
6 4 8

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 Covariance Calculations

Number Number
of Sales of Cars
Reps Sold
xi y
2 3.5 -1.5 4 7 -3 4.5
5 3.5 1.5 10 7 3 4.5
3 3.5 -0.5 7 7 0 0
4 3.5 0.5 7 7 0 0
3 3.5 -0.5 6 7 -1 0.5
4 3.5 0.5 8 7 1 0.5
=
10
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 Covariance Calculations
Completing the calculation:

• A positive value implies a positive linear relationship.

(as one variable increases, the second variable also tends to
increase)
• A negative covariance indicates a negative linear
relationship.
(as one variable increases, the second variable tends to decrease)
• A covariance close to zero indicates no relationship
between the two variables.
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 Correlation Coefficient Calculations

Completing the calculation:

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 Sample Correlation Coefficient

The sample correlation coefficient, rxy ,

indicates both the strength and direction of
the linear relationship between the
independent and dependent variables.
• The values of r range from -1.0, a strong
negative relationship, to +1.0, a strong
positive relationship.
• When r = 0, there is no relationship
between variables x and y.

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 The Correlation Coefficient
Examples of approximate r values

Graph A (r = 1.0): perfect positive correlation between x and y

Graph B (r = -1.0): perfect negative correlation between x and y

Graph C (r = 0.6): a moderately positive relationship: y tends to increase as x increases,

but not necessarily at the steady rate we observed in Graph A
Graph D (r = -0.4): a relatively weak negative relationship: the correlation coefficient is
closer to zero, negative r value so y tends to decrease as x increases
Graph E (r = 0): no relationship between x and y

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 Using Excel to Calculate the Sample
Covariance and Correlation Coefficient
The Excel functions for the sample covariance
and sample correlation coefficient:
= COVARIANCE.S(x data values, y data values)
= CORREL(x data values, y data values)
The letter S in covariance function indicates “sample”.

The function for the population covariance is:

= COVARIANCE.P(x data values, y data values)
The letter P in covariance function indicates “population”.

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