Topic :

CORRELATION ANALYSIS

Statistical Analysis for

Industrial Engineering -2
(INEN 30063)

Engr . R. Ilagan
Lecturer
DEFINITIONS
Correlation gives the relationship or degree of association
between two or more sets of variables.
Remarks: Relationship does not, however, automatically imply a
cause-and-effect type. It simply indicates whether one variable
is a good predictor of another.
Correlation gives the relationship or degree of association
between two or more sets of variables.
Multiple or partial correlation coefficient measures the degree of
relationship or association among several variables.
Correlation coefficient is the measure of the degree of
relationship between two variables.
1. simple or linear correlation 2. non-linear correlation
Scatter diagram is a graphical device where points are plotted in
a two-dimensional coordinate system. The given paired data
correspondents to the x-and-y coordinates of these points. It
is a visual representation of relationship of two or more
variables.
TYPES OF MEASURES OF CORRELATION
1. Pearson r – correlation between interval variables

2. Spearman (rho) ρ – correlation between ordinal variables

of 30 samples or less

3. Goodman & Kruskal’s (gamma) – correlation between

ordinal variables of more than 30 samples
4. Guttman’s (lambda) – correlation between nominal
variables
5. Point Biserial rpb – correlation between interval and
dichotomous nominal variables
6. Correlation Ratio (eta sqd) η-sqd – correlation between
interval and any nominal variables
 SAMPLE PROBLEM – SIMPLE CORRELATION

Problem. Consider the table below . Fill out the columns with necessary data for the
given table below.

Requirements:
1. Determine the coefficient of correlation (r).Interpret the value obtained .
2. Test the significance of Pearson r at alpha =0.05
-Round the derived values to four decima.ls for your computations and round off the final answer to
two decimal places .

No. of No. of XY X2 Y2
machines in completed
line services
( x) ( y)
3 3
6 2
5 3
4 5
4 3
6 6
8 6
7 4
End.
The End