In a bivariate data on x and y, variance of x = 49, variance of y = 9 and covariance (x,y) = -17.5. Find coefficient of correlation between x and y.

Solution: We know that:

Given

Hence, there is a highly negative correlation.

Factors influencing the size of correlation coefficient The size of r is very much dependent upon the variability of measured values in the correlation sample. The greater the variability, the higher will be the correlation, everything else being equal. The size of r is altered when researchers select extreme groups of subjects in order to compare these groups with respect to certain behaviors. Selecting extreme groups on one variable increases the size of r over what would be obtained with more random sampling. Combining two groups which differ in their mean values on one of the variables is not likely to faithfully represent the true situation as far as the correlation is concerned. Addition of an extreme case (and conversely dropping of an extreme case) can lead to changes in the amount of correlation. Dropping of such a case leads to reduction in the correlation while the converse is also true