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CORRELATION ANALYSIS

Introduction
Correlation a LINEAR association between two random variables Correlation analysis show us how to determine both the nature and strength of relationship between two variables When variables are dependent on time correlation is applied Correlation lies between +1 to -1

 A zero correlation indicates that there is no relationship between the variables A correlation of 1 indicates a perfect negative correlation A correlation of +1 indicates a perfect positive correlation

Scatter plot showing correlations

SPSS (Correlation)
AnalyzeCorrelate (Bivariate)

Points to be noted:
1. Confidence Level
Correlation is highly significant 0.01** Correlation is significant 0.05*

2. N (sample size) 3. Pearson Correlation

Pearson Correlation
The most common measure of correlation is the Pearson Correlation. Pearson's correlation reflects the degree of linear relationship between two variables. It ranges from +1 to -1. The correlation between two variables reflects the degree to which the variables are related.

Multicollinearity

Multicollinearity occurs when variables are so highly correlated. In other words, when two variables are highly correlated, they both convey essentially the same information. Correlations of .90 or greater may indicate Multicollinearity.