FSS 204 CLASS WORKSHEET

CORRELATION ANALYSIS
A correlation is a single number that describes the degree of relationship between two variables
Correlation analysis is used when exploring the direction (positive or negative) and strength (-1 to +1) of relationship. But
knowing that two variables are correlated does not tell us whether one causes the other. There are different types of patterns
one might find in a relationship.

(i)There is the case of no relationship at all: r = 0

(ii) The positive relationship: in a positive relationship, high values on one variable are associated with high values on the
other and low values on one are associated with low values on the other. For instance, we often talk of a correlation between
inflation and unemployment. When inflation is high, unemployment also tends to be high. When inflation is low,
unemployment also tends to be low
(iii) The negative relationship implies that high values on one variable are associated with low values on the other. This is also
sometimes termed an inverse relationship.

Types of correlation analysis

a. Pearson correlation: This is used when the two variables are continuous
b. Spearman rank correlation is used to calculate the strength of the relationship between two continuous or
ordinal variables. It is a non-parametric test of correlation.
c. Partial correlation is an extension of Pearson correlation- it allows the control for the possible effect of
another confounding variables. It removes the effect of the confounding variable and gives an accurate
picture of the relationship between the two variables of interest.

∑(𝑥−𝑥̅ )(𝑦−𝑦̅)
𝑟= The test statistics is r
√∑(𝑥−𝑥̅ )2 ∑(𝑦−𝑦̅)2

Degree of freedom (df): n-2

Class Exercise 1
An insurance company wants to determine the strength of the relationship between the number of hours a person
works per week and the number of injuries or accident that person has over a period of one week. The data are
shown below for a sample selected from their clients.
Number of hours 40 32 36 44 41
Number of injuries 1 0 3 8 5

Is there any relationship between the number of hours a person works per week and the number of injuries or
accident that person has over a period of one week?
Statement of hypothesis –
Null Hypothesis: There is no relationship between the number of hours a person works per week and the number
of injuries or accident that person has over a period of one week
Alternative Hypothesis: There is significant relationship between the number of hours a person works per week
and the number of injuries or accident that person has over a period of one week

r tabulated for df= (5-2) = 3 at α - 0.05 = 0.632

The test statistics is r -Pearson correlation
X Y X-X (X-X)2 (Y-Y) (Y-Y) 2 (X-X)(Y-Y)
40 1 1.40 1.960 -2.40 5.76 -3.36
32 0 -6.60 43.560 -3.40 11.56 22.44
36 3 -2.60 6.760 -0.40 0.16 1.04
44 8 5.40 29.160 4.60 21.16 24.84
41 5 2.40 5.760 1.60 2.56 3.84
Total 0.00 87.200 0 41.20 48.800
Mean of X =38.6 Mean of Y = 3.40
Computation of ∑(𝑥 − 𝑥̅ )(𝑦 − 𝑦̅) = 48.800
Computation of √∑(𝑥 − 𝑥̅ )2 ∑(𝑦 − 𝑦̅)2 = 59.939
r calculated = 0.800
r tabulated for df= (5-2) = 3 at α - 0.05 = 0.878 (Using two tail test)
Conclusion and interpretation: The tabulated value is greater than the calculated value, we therefore accept
Null hypothesis (H0). There is no significant positive relationship between alumnus contribution and years after
school.

Class Exercise 2
The data below were obtained in a study on the number of absences and final grades of six randomly selected
students from a statistics class. At α = 0.01, Is there any relationship between the number of absences and final
grades in the statistic class?

Number of absences 6 2 15 9 12 5
Final grades 82 86 43 74 58 90

Class Exercise 3
Most births are about 24 months long and are much longer usually only in cases of impaired fertility or
marital disruption. Despite this clustering around 24 months, it is assumed that there might be a positive
relationship between education and birth interval length since educated women are more likely to use
contraceptives. Measuring birth intervals in months and education in years for ten women as follows,
what can you say about this assumption at α = 0.05?
Birth interval 23 26 11 27 29 22 21 20 23 30
Years of Education 9 12 16 6 10 11 14 17 9 17

Class Exercise 4
A study on lifestyle pattern was conducted to determine the relationship between a person’s monthly
income (in thousands) and the number of meals that person eat away from home per month as presented
in the data below. What is the conclusion of the study at α =0 .05?

Income 50 120 150 95 85 40 60

Meals 8 12 16 10 9 3 7

Critical Value for Pearson Correlation

df 0.1 0.05 0.02 0.01
1 0.988 0.997 0.9995 0.9999
2 0.900 0.950 0.980 0.990
3 0.805 0.878 0.934 0.959
4 0.729 0.811 0.882 0.917
5 0.669 0.754 0.833 0.874
6 0.622 0.707 0.789 0.834
7 0.582 0.666 0.750 0.798
8 0.549 0.632 0.716 0.765
9 0.521 0.602 0.685 0.735
10 0.497 0.576 0.658 0.708