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Statistics for Management2.2done

# Statistics for Management2.2done

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11/10/2009

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Set-22. What is the different between correlation and regression? What do youunderstand by Rank Correlation? When we use rank correlation and whenwe use Pearsonian Correlation Coefficient? Fit a linear regression line in thefollowing data -X 12 15 18 20 27 34 28 48Y 123 150 158 170 180 184 176 130ANSWERE:Difference between Correlation and Regression
Correlation Coefficient, R, measures the strength of bivariateassociation

The regression line is a prediction equation that estimates the valuesof y for any given xcorrelation (often measured as a correlation coefficient) indicates thestrength and direction of a linear relationship between tworandom variables.Correlation is a measure of association between two variables. The variablesare not designated as dependent or independent.CorrelationWhen two social, physical, or biological phenomena increase or decrease proportionately and simultaneously because of identical external factors, the phenomena are correlated positively; under the same conditions, if oneincreases in the same proportion that the other decreases, the two phenomena are negatively correlated. Investigators calculate the degree of correlation by applying a coefficient of correlation to data concerning thetwo phenomena. The most common correlation coefficient is expressed as

in which x is the deviation of one variable from its mean, y is the deviationof the other variable from its mean, and N is the total number of cases in theseries. A perfect positive correlation between the two variables results in acoefficient of +1, a perfect negative correlation in a coefficient of -1, and atotal absence of correlation in a coefficient of 0. Intermediate values between +1 and 0 or -1 are interpreted by degree of correlation. Thus, .89indicates high positive correlation, -.76 high negative correlation, and .13low positive correlation.Simple regression is used to examine the relationship between onedependent and one independent variable. After performing an analysis, theregression statistics can be used to predict the dependent variable when theindependent variable is known. Regression goes beyond correlation byadding prediction capabilities.Instatistics, Spearman's rank correlation coefficient or Spearman's rho,named after Charles Spearmanand often denoted by the Greek letter ρ(rho) or as rs, is anon-parametricmeasure of correlation– that is, it assesses how well an arbitrarymonotonicfunction could describe the relationship betweentwovariables, without making any other assumptions about the particular nature of the relationship between thevariables. Certain other measures of correlation are parametric in the sense of being based on possiblerelationships of a parameterised form, such as a linear relationshipThe Spearman rank correlation coefficient can be used to give anR-estimate, and is a measure of monotone association that is used when thedistribution of the data make Pearson'scorrelation coefficientundesirable or misleading.The Spearman rank correlation coefficient is defined bywhere is the difference instatistical rank of corresponding variables, and isan approximation to the exactcorrelation coefficient

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