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CORRELATION

ANALYSIS

1101091-1101100

PGDM-B

Introduction

Correlation a LINEAR association between two

random variables

both the nature and strength of relationship

between two variables

is applied

A zero correlation indicates that there is no

relationship between the variables

correlation

correlation

Types of Correlation

There are three types of correlation

Types

Type1

one increases (decreases), the other also

increases (decreases).

If two variables are such that when one

increases (decreases), the other decreases

(increases)

If both the variables are independent

Type 2

line

Type 3

One dependent and more than one independent

variables

One dependent variable and more than one

independent variable but only one independent

variable is considered and other independent

variables are considered constant

Methods of Studying Correlation

Method

Correlation: Linear

Relationships

Strong relationship = good linear fit

180

160

160

140

140

120

120

Symptom Index

S ymptom Index

100

100

80 80

60 60

40 40

20

20

0

0

0 50 100 150 200 250

0 50 100 150 200 250

Drug A (dose in mg)

Drug B (dose in mg)

Points clustered closely around a line show a strong correlation.

The line is a good predictor (good fit) with the data. The more

spread out the points, the weaker the correlation, and the less

good the fit. The line is a REGRESSSION line (Y = bX + a)

Coefficient of Correlation

A measure of the strength of the linear relationship

between two variables that is defined in terms of the

(sample) covariance of the variables divided by their

(sample) standard deviations

Represented by “r”

r lies between +1 to -1

-1 < r < +1

correlations and negative linear

correlations, respectively

n XY X Y

r xy 2

n X ( X) n Y ( Y) 2 2 2

top

Individual variability of X and Y variables on the

bottom

Interpreting Correlation

Coefficient r

strong correlation: r > .70 or r < –.70

moderate correlation: r is between .30 &

.70

or r is between –.30 and –.70

weak correlation: r is between 0 and .30

or r is between 0 and –.30 .

Coefficient of Determination

Coefficient of determination lies between 0 to 1

Represented by r2

The coefficient of determination is a measure of

how well the regression line represents the data

every point on the scatter plot, it would be able

to explain all of the variation

points, the less it is able to explain

r 2, is useful because it gives the proportion of the

variance (fluctuation) of one variable that is

predictable from the other variable

certain one can be in making predictions from a

certain model/graph

explained variation to the total variation

1, and denotes the strength of the linear association

between x and y

The Coefficient of determination represents the

percent of the data that is the closest to the line of

best fit

can be explained by the linear relationship between

x and y (as described by the regression equation)

unexplained

Spearmans rank coefficient

is not available in numerical form and as an

alternative the method, the method of rank

correlation is used. Thus when the values of the

two variables are converted to their ranks, and

there from the correlation is obtained, the

correlations known as rank correlation.

Computation of Rank

Correlation

Spearman’s rank correlation coefficient

Ranks are not given but grades are given but not

repeated

repeated

Testing the significance of correlation

coefficient

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