Regression Analysis

DRS-211
PGDRS (Third Batch)
Lesson 1

eithae@gmail.com
Daw Eithae Maung Maung
Lecturer
Department of Statistics
Monywa University of Economics
13.8 CORRELATION
ANALYSIS

• Coefficient of determination

• Correlation coefficient
Eg 13.2 Hop Scotch air line problem

The regression line is Y=b0 + b1X

The estimated regression line i = 4.40 + 1.08X
b0=4.40 and b1=1.08
Correlation analysis examine the linear
relationship of variables.
Examples
• time spent running and body fat
• watching TV and Exam score
• height and weight
• temperature and ice cream sales
• number of trees cut down and probability of erosion
• coffee consumption and intellengence
• shoe size and movie watched
The Coefficient of Determination

To measure the strength of the relationship between

variables

A measure of the explanatory power of the regression

model
Total Deviation
The total deviation is the amount by which an actual
value of y, yi , differs from , the mean of all the values for the
dependent variable.
Explained and Unexplained Deviation
The explained deviation is the difference between the
value predicted by the model () and the mean value of Y(): -
The unexplained deviation is the difference between the
actual value() and that value predicted by the model ():-.
 Using month 13 as an example, the data show 23,000 people flew on Hop Scotch (Y i =23).

== =23-17.87=5.13

= 4.40 + 1.08X
=4.40+1.08(16)=21.68
Total deviation = Explained deviation + Unexplained deviation
() = (-) +(-)

Sum of squares of the total deviation,

SST=

Sum of the squares of the regression,

SSR=

Sum of the squared error,

SSE=
Coefficient of determination The coefficient of determination
measures the explanatory power of the regression model by
measuring what potion of the change in Y is explained by the change
in X.

=
==
0 < <1
Eg data from Hop Scoth from table 13-2

== =0.9376 0.94

The coefficient of determination reveals that 94 percent of the change

in the number of passengers is explained by changes in advertising
expenditures.

The other 6 percent can be explained by some variable(s) other than

advertising.
This 6 percent is sometimes referred to as coefficient of
nondetermination,.
The Coefficient of Correlation
strength of the relationship between X and Y
r=; -1r1
If r>0, , will be positive and the line will slope up.
If r<0, , will be negative and the regression line will be negatively
sloped.
Example
r==0.96836
Service call Number of Copiers Number of Minutes
serviced Required
1 4 109
2 2 58
3 5 138
4 7 189
5 1 37
6 3 82
7 4 103
8 5 134
9 2 68
10 4 112
11 6 154
Car rental service company
Company Cars (in ten thousands) Revenue (in
billions)
A 63.0 $7.0
B 29.0 3.9
C 20.8 2.1
D 19.1 2.8
E 13.4 1.4
F 8.5 1.5