Correlation &Regression

Dr Hirak Dasgupta
Correlation
• Relationship between two quantitative variables.
• Correlation measures the degree of relationship between two
variables.
• Examples of correlation:
• Weight and height of individuals
• Advertising expenses and Sales revenue
• Quantity of fertilizer used and Yield of crop
• Is there any association between two or more than two variables?
Correlation and Regression
• Correlation measures the degree of relationship between two
variables whereas Regression measures the nature of relationship.
• Relationship between Price and Demand
Types of Correlation
• Positive and Negative correlation
• Linear and Non linear correlation
• Simple, Partial and Multiple correlation
Positive and Negative correlation
• Positive Correlation: Same direction of change in the value of
variables.
• Negative correlation: Change in the values of variables in opposite
direction.
Positive and Negative Correlation
(Scatter diagram)
Linear and Non linear correlation
• Linear correlation: A constant change in one of the variable values
with respect to a change in the corresponding values of another
variable.
• Non linear Correlation Amount of change in one of the variable values
does not bear a constant ratio to the change in the corresponding
values of another variable.
Types of Correlation
• Simple correlation: Correlation between two variables chosen for
study.
• Partial correlation: Two variables are chosen to study the correlation
but the effect of the third variable is kept constant.
• Multiple correlation: Relationship between three or more than three
variables studied simultaneously.
Measure Correlation
• Scatter diagram
• Karl Pearson’s coefficient of correlation (r).
r= r= -1 through 0 to +1
Note: the denominator is Square root of both∑x². ∑y²