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# Objectives of this chapter:

## What is correlation analysis?

Calculate the coefficient of correlation.
Estimate the equation that describe the
relationship between two variables, regression
analysis.

## When we study the relationship between two

a scatter diagram. This procedure provides a visual
representation of the relationship between the
variables. The next step is usually to calculate the
correlation coefficient. It provides a quantitative
measure of the strength of the relationship
between two variables.

## What is correla-on analysis?

Copier Sales of America sells copiers to businesses of all sizes
throughout the United States and Canada. Ms. Marcy Bancer was
recently promoted to the position of national sales manager. She
would like to impress upon the attendance the importance of
making extra sales call each day. She selects a random sample of
10 sales representatives and determines the number of sales calls
they made last month and the number of copiers they sold.
What do you see from the
scha5er plot?

## Which variable is independent

and which is dependent?

## The correla-on coecient

The following drawing summarizes the strength and direction
of correlation coefficient.

Examples:

Examples:

## The correla-on coecient

n: sample size
Sx: standard deviation of x
Sy: standard deviation of y

Example:

## The correla-on coecient

Regression analysis
In regression analysis, our objective is to use the data to
position a line that best represents the relationship between
the two variables. Our first approach is to use a scatter
diagram to visually position the line.

Regression analysis

Regression equa-on

## 1. For the previous example, calculate the intercept and slope

of the regression equation.
2. Predict the number of copiers sold at number of calls
equal 35.

Another example:

## Hours (x) 1.5

2.6

3.4

6.2

5.3

3.5

6.5

Score (y)

99

78

83

100

76

100

66

Linear

100

Positive
80

No outliers

60

40

20

r=

i =1

xi

yi

1.5
2.6
3.4
6.2
5.3
3.5
6.5

66
99
78
83
100
76
100

( xi x )( yi y )
(n 1) s x s y

29 602

x=

i =1 i

29
= = 4.14
7

y=

i =1 i

602
= 86
7

x = 4.14

r=

i =1

y = 86

xi

yi

1.5
2.6
3.4
6.2
5.3
3.5
6.5

66
99
78
83
100
76
100

( xi x )( yi y )
(n 1) s x s y

2 ( y y)2
(
y

y
)
( xi x ) i
( xi x )
i

29 602
7

sx =

i=1 ( xi x )
n 1

sy =

2
(
y

y
)
i=1 i

n 1

x = 4.14

r=

i =1

y = 86

(n 1) s x s y

2 ( y y)2
(
y

y
)
( xi x ) i
( xi x )
i
66 -2.64 -20
6.97
400
99 -1.54 13
2.37
169
78 -0.74
-8
0.55
64
83 2.06
-3
4.24
9
100 1.16
14
1.35
196
76 -0.64 -10
0.41
100
100 2.36
14
5.57
196
602
21.46
1134

yi

xi

1.5
2.6
3.4
6.2
5.3
3.5
6.5
29

sx =

( xi x )( yi y )

i=1 ( xi x )
n 1

21.46 = 1.89
=
7 1

sy =

2
(
y

y
)
i=1 i

n 1

1134
= 13.75
=
7 1

x = 4.14

r=

i =1

y = 86

xi

1.5
2.6
3.4
6.2
5.3
3.5
6.5
29

( xi x )( yi y )
(n 1) s x s y

2 ( y y)2
(
y

y
)
( xi x ) ( yi y )
( xi x ) i
( xi x )
i
66 -2.64 -20
6.97
400
99 -1.54 13
2.37
169
78 -0.74
-8
0.55
64
83 2.06
-3
4.24
9
100 1.16
14
1.35
196
76 -0.64 -10
0.41
100
100 2.36
14
5.57
196
602
21.46
1134

sx = 1.89
s y = 13.75

yi

x = 4.14

r=

i =1

y = 86

xi

1.5
2.6
3.4
6.2
5.3
3.5
6.5
29

( xi x )( yi y )
(n 1) s x s y

88.20
= 0.57
=
6 1.89 13.75

2 ( y y)2
(
y

y
)
( xi x ) ( yi y )
( xi x ) i
( xi x )
i
66 -2.64 -20
6.97
400
52.80
99 -1.54 13
2.37
169
-20.02
78 -0.74
-8
0.55
64
5.92
83 2.06
-3
4.24
9
-6.18
100 1.16
14
1.35
196
16.24
76 -0.64 -10
0.41
100
6.40
100 2.36
14
5.57
196
33.04
602
21.46
1134
88.20

sx = 1.89
s y = 13.75

yi

0.57

Positive

Linear
From scatter
plot

Exercise: