STATISTICS AND PROBABILITY

WEEK 4: LESSON 2
PEARSON PRODUCT MOMENT COEFFICIENT OF CORRELATION

To describe the relationship between two variables, we can compute the correlation
coefficient r. The correlation coefficient is a number between -1 and 1 that describes both
the strength and the direction of correlation. In symbol, we write -1 ≤ r ≤ 1.

Value of r Interpretation
r=1 Perfect Positive Correlation
r=0 No Correlation or Zero Correlation
r = -1 Perfect Negative Correlation

The following scale is used to interpret the other values of r.

Correlation Scale
Value of r Interpretation (Positive or Negative)
±0.81 to ±0.99 Very high correlation
±0.61 to ±0.80 High correlation
±0.41 to ±0.60 Moderately high correlation
±0.21 to ±0.40 Low correlation
±0.01 to ±0.20 Negligible or Zero correlation

Formula:
𝑛𝛴𝑥𝑦 − ∑𝑥∑𝑦
𝑟=
√[𝑛𝛴𝑥 2 − (∑𝑥 )2 ][𝑛∑𝑦 2 − (∑𝑦)2 ]

Example:
1. A store manager wishes to find out whether there is a relationship between the age of
the employees and the number of sick days they incur each year. The data for the
sample is shown. Calculate the correlation coefficient r and describe the relationship in
terms of strength and direction.
Age (x) Days (y) x2 y2 xy
18 16 324 256 288
26 12 676 144 312
39 9 1512 81 351
48 5 2304 25 240
53 6 2809 36 318
58 2 3364 4 116

𝜮𝒙 = 𝟐𝟒𝟐 ∑𝒚 = 𝟓𝟎 𝜮𝒙𝟐 = 𝟏𝟎𝟗𝟗𝟖 ∑𝒚𝟐 = 𝟓𝟒𝟔 𝜮𝒙𝒚 = 𝟏𝟔𝟐𝟓

SOLVE FOR r:
𝑛𝛴𝑥𝑦 − ∑𝑥∑𝑦
𝑟=
√[𝑛𝛴𝑥 2 − (∑𝑥 )2 ][𝑛∑𝑦 2 − (∑𝑦)2]

6(1 625) − (242)(50)

𝑟=
√[6(10 998) − (242)2 ][6(546) − (50)2 ]
 9 750 − 12 100
𝑟=
√[6(10 998) − (242)2 ][6(546) − (50)2 ]

−2 350
𝑟=
√[65 988 − 58 564][3 276 − 2 500]

−2 350
𝑟=
√[7 424][776]

−2 350
𝑟=
√5 761 024

−2 350
𝑟=
√5 761 024

−2 350
𝑟=
2 400.2133

r = -0.97907965
r = -0.98
Interpretation: Very High Negative Correlation