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 Learning Objectives:
describe the nature of bivariate
data:

calculate the Pearson Product-

Moment Correlation coefficient;
and
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to manifest the value of being

 01 Correlation
Analysis
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 Getting Ready! Plot the following
points in the rectangular system.

(2, 5)
(6, 3)
(3, -2)
(-5, 9)
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(-3, -6)
 Why does profit usually increases
when capital increases?

Why does blood pressure increase

when one gets older?

Why does savings generally

increase when expenditures
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decrease?
 Bivariate Data
Data that involve two variables

Profit & capital

Savings & expenditure
Blood pressure & age
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 Correlation
Analysis
❖ A statistical method used to determine whether there
is a relationship between two variables
❖ Data can be represented by the ordered pairs (x, y)
where x is the independent variable, and y is the
dependent variable.
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 Scatter Plot
❖ “Scatterplot, Scatter graph, or scatter
diagram”
❖Used to determine if there is relationship
between the two variables
❖A graphical representation
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 The relationship or correlation
between two variables may be
direction
described in terms of
and strength
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 Direction of
Correlation
Positive Correlation
Negative Correlation

Zero Correlation
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 Positive Correlation

As x increases (or
decreases), y tends
to increase
(decrease)
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 Negative Correlation

As x increases,
y tends to decrease
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 Zero Correlation

Exists when high values

on one variable
correspond to either high
or low values in the
other variable
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 Strength of
➔ ModerateCorrelation
Positive Correlation
➔ Strong Positive Correlation
➔ Perfect Positive correlation
➔ Moderate Negative Correlation
➔ Strong Negative correlation
➔ No Correlation
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 The trend line is the line closest
to the points. It tells the direction
of correlation (whether positive -
trend line points to the right, or
negative- trend line points to the left)
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 02 Pearson
correlation
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 Pearson
❖“Pearson r”correlation
❖Karl Pearson
coefficient
❖It indicates the degree of relationship between
two variables
❖It indicates the strength of correlation
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 Example:

Below are the data for five employees

with their number of work certifications
and their annual income (in thousands of
pesos). Calculate r and interpret the
relationship of the variables.
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 Number of Certification Annual Income in
(X) Thousand Pesos (Y)
1 250
2 250
4 300
5 350
5 400
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 X Y XY x2 y2
1 250 250 1 62 500
2 250 500 4 62 500
4 300 1 200 16 90 000
5 350 1 750 25 122 500
5 400 2 000 25 160 000
Σx= 17 Σy=1 550 Σxy=5 700 Σx2=71 Σy2=497 500
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 r = 0.91
Very High Positive Correlation
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