INTRODUCTION

Bivariate distribution-A distribution in which each unit of series assumes two values.

Multivariate distribution-A distribution in which each unit of the series assumes more than two
values
.

Correlation-It is a statistical tool which is used to study the relationship between two variables
There are various methods used to study and measureextent of relationship between two
variables one of them is correlation analysis.

When the relationship is of a quantitative nature, theappropriate statistical tool for discovering
andmeasuring the relationship and expressing it in a brief formula is known as correlation-
Croxton and Cowden.
Types of correlation

Positive and negative correlation.

Linear and non-linear correlation.

Scatter diagram method

Scatter diagram is one of the simplest ways of diagrammatic representation of a bivariate

distributionand provides us one of simplest tools of ascertainingthe correlation between two
variables.

The following points should be noted in interpretingthe scatter diagram regarding the correlation
betweenthe two variables:

If the points are very dense, i.e. close to each other a fairlygood amount of correlation may be
expected. If points arewidely scattered, a poor correlation may be expected.

If the points reveal any trend the variables are said to becorrelated and if no trend is revealed, the
variables areuncorrelated.

If all the points lie on a straight line starting form theleft bottom and going up towards the right
top, thecorrelation is perfect and positive, and if all the pointslie on a straight line starting form
left top and comingdown to right bottom, the correlation is perfect andnegative.

If there is upward trend rising from lower left hand corner toupper right hand corner,
the correlation is positive. If the points depict a downward trend form the upper left handcorner
to lower right corner the correlation is negative.
Regression

Regression analysis, in the general sense, means theestimation or prediction of the unknown
value of onevariable from the known value of the other variable.

Linear regression-If the regression curve is a straightline.

Non-linear regression-If the regression curve is not astraight line.

Correlation Vs. Regression Analysis

Correlation literally means the relationship betweentwo or more variables which vary.
Regression meansstepping back or returning to the average value.

Correlation need not imply cause and effectrelationship between the variable under
study.Regression clearly indicates the cause and effectrelationship.

Correlation coefficient is a linear relationship betweenx and y and is independent of the units
of measurement. It is pure number lying between + or 1. Regression is absolute measure and
the variable xand y are dependent on each other.

Correlation analysis is confined to only to study of linear relationship between the variables
andtherefore, has limited applications. Regressionanalysis has wider application as it studies
linear aswell as non-linear relationship between the variables.