Partial correlation and multiple correlation:

Correlation:
If two quantities vary in such a way that movements in one are
accompanied by movements in the other, these quantities are
correlated. For example, there exists some relationship between
age of husband and age of wife.
The correlation analysis refers to the techniques used in
measuring the closeness of the relationship between the variables
Use:
Most of the variables show some kind of relationship, for example
there is relationship between price and supply, Income and
expenditure etc. with the help of correlation analysis we can
measure in one figure the degree of relationship existing between
the variables.

Types of correlation:
1. Positive or negative
2. Simple, partial and Multiple
3. Linear and non-linear

Simple, partial and Multiple

When only two variables are studied it is a problem of

simple correlation. When three or more variables are
studied it is a problem of either multiple correlation
or partial correlation.
Partial correlation
If there are three variables X1, X2 and X3 there will be three
coefficients of partial correlation, each studying the relationship
between two variables when the third is held constant. If we denote by
r12.3 ie., the coefficient of partial correlation between X1 and X2
keeping X3 constant, it is calculated as

r12  r13 r23

r12 . 3 
1  r13 2 1  r232

r13  r12 r23

r13 .2 
1  r12 2 1  r23
2

r23  r12 r13

r23 . 1 
1  r12 2 1  r132
Problem: In a trivariate distribution , it is found that r12  0.7 ,
r13  0.61 and r23  0 . 4 . Find the partial correlation
coefficients.

r12  r13r23 0.7  (0.61)(0.4)

r12.3    0.628
1  r132 2
1  r23 1  (0.61) 2
1  (0.4) 2

r13  r12 r23

r13.2 
=0.504
1  r12 2 1  r23
2

r23  r12r13
r23.1  =-0.048
1  r122 1  r132
2. Is it possible to get the following from a set of experimental data?

r12  0.6, r13  0.5 and r23  0.8

r12  r13r23 0.6  (0.5)(0.8)

r12.3    1.923
1  r132 2
1  r23 1  (0.5) 2
1  (0.8) 2

Since the value of r12.3 is greater than one, there is some inconsisting
in the given data.
Multiple correlation
The coefficients of multiple correlation with three variables X1 , X2
and X3 are R1 .23 , R 2 .13 and R 3 . 12 .

R1.23 is the coefficient of multiple correlation related to X1 as a

dependent variable X2 and X3 as two independent variables and it can
be expressed in terms of r12 , r23 and r13 as

r122  r132  2r12 r23r13 r122  r232  2r12 r23r13

R1.23  ; R2.13 
1  r232 1  r132

r132  r232  2r12 r23 r13

R3.12  ;It can be noted that R1.23  R1.32 ,
1  r122
R2.13  R2.31 , R3.12  R3.21

Problem:The following Zero –order correlation coefficients are given:

r12  0.98 , r13  0.44 and r23  0.54 . Calculate multiple correlation
coefficient treating first variable as dependent and second & third
variables as independent.
 r122  r132  2r12 r23r13
R1.23  =0.986
1  r232

Multiple linear Regressions

If the number of independent variables in a regression model is more
than one, then the model is called as multiple regression. In fact,
many of the real-world applications demand the use of multiple
regression models.
A sample application is as stated below:
Y  bo  b1 X 1  b2 X 2  b3 X 3  b4 X 4

Where Y represents the economic growth rate of country, X1

represents the time period, X2 represents the size of the populations
of the country, X3 represents the level of employment in percentage,
X4 represents the percentage of literacy, b is the intercept and b1 , b2 ,
b3 and b4 are the slopes of the variables X1, X2, X3 and X4
respectively. In this regression model X1, X2, X3 and X4 are the
independent variables and Y is the dependent variable.
Regression Model with Two independent variables using Normal
equations:
Suppose the number of independent variables is two, then
Y  bo  b1 X 1  b2 X 2

Normal equations are

Y  nbo  b1  X 1  b2  X 2
2
 Y X1  bo  X 1  b1  X 1  b2  X 1 X 2
2
Y X 2  bo  X 2  b1  X 1 X 2  b2  X 2
Where n is the total number of combinations of observations. The
solution to the above set of simultaneous equations will form the
results for the coefficients b , b1 and b2 of the regression model.

Problem 1: The annual sales revenue(in crores of rupees ) of a product

as a function of sales force(number of salesmen) and annual
advertising expenditure(in lakhs of rupees) for the past 10 year are
summarized in the following table.
Annual sales 20 23 25 27 21 29 22 24 27 35
revenue Y
Sales force 8 13 8 18 23 16 10 12 14 20
X1

Annual 28 23 38 16 20 28 23 30 26 32
advertising
expenditures
X2

Let the regression model be Y  bo  b1 X 1  b2 X 2

Y X1 X2 X12 X22 X1X2 YX1 YX2

20 8 28 64 784 224 160 560
23 13 23 169 529 229 299 529
25 8 38 64 1444 304 200 950
27 18 16 324 256 288 486 432
21 23 20 529 400 460 483 420
29 16 28 256 784 448 464 812
22 10 23 100 529 230 220 506
24 12 30 144 900 360 288 720
27 14 26 196 676 364 378 702
35 20 32 400 1024 640 700 1120
 y  253  X 1  142  X 2  264  X 12  2246  X 2 2  7326  X 1X 2  3617  YX 1  142  YX 2  142
Substituting the required values in the normal equations, we get the
following simultaneous equations
253  10bo  142b1  264b2

3678  142bo  2246b1  3617 b2

6751  264bo  3617 b1  7326b2

The solution to the above set of simultaneous equation is

bo  5.1483, b1  0.6190 and b2  0.4304

Therefore, the regression model is Y  5.1483  0.6190 X 1  0.4304 X 2