Correlation

So far we have studied problems relating to one variable only i.e. mean of the
distribution of height, SD of weight etc.But many situations arise in which we may
have to study two variables simultaneously, say x and y. For example, the variable
may be:-
i)The amount of rainfall and yield of a certain crop.
ii)Income and expenditure of certain families.
iii)Price of commodities and amount demanded.
iv)Age and sick days.

Age 20 30 32 35 40 46 52 55 58 62
Sick 11 12 10 13 14 16 15 17 18 19
days

There are two main problems involved in such studies:-

Firstly, the data may reveal some association between x and y, and we may be
interested to measure numerically the strength of association between the variables.
The statistical tool with the help of which these relationship between the two variables
is studied is called correlation.
 Correlation
The word “correlation” is used to denote
the degree of association between two
variables. If two variables x and y are so
related that variations in the magnitude of
one variable tend to be accompanied by
variations in the magnitude of the other
variable are said to be correlated.
 Types of correlation
1) Positive.
2) Negative.
3) Uncorrelated.
Whether correlation is positive or negative would
depend upon the direction of change of the
variable.
If both the variables are varying in the same
direction i.e. if one variable is increasing the other
on an average is also increasing or if one variable is
decreasing the other on an average is also
decreasing, correlation is said to be positive.
If, on the other hand, the variables are varying in opposite directions i.e. as one
variable is increasing the other is decreasing or vice versa, correlation is said to be
negative.

 Positive Correlation

X Y
80 50
70 45
60 30
40 20
30 10

 Negative Correlation

X Y
100 10
90 20
60 30
40 40
30 50
If the values of y are not affected by changes in the values
of x, the values are said to be uncorrelated.
Correlation analysis helps us in determining the degree of
relationship between two or more variables- it does not tell
us anything about cause and effect relationship. Even a
high degree of correlation does not necessarily mean that a
relationship of cause and effect exists between variables or
simply stated, correlation does not necessarily imply
causation relationship though the existence of causation
always implies correlation.
 Regression
After having established the fact that