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LINEAR

CORRELATION
LINEAR CORRELATION
COEFFICIENT
The linear correlation coefficient r,
measures the degree to which the
points in the scatter diagram tend to
cluster about a straight line. In other
words, r measures the degree of linear
relationship between the x and y
values.
DEFINITON
The linear correlation coefficient r for a
collection of n pairs of data values is as shown,
where sx and sy are the standard deviations of
the values of the x values and y values,
respectively
An alternative simplified formula gives the
same result, where n is the number of pairs
of data.
PROPERTIES OF r
The value of r is always between -1 and
1: -1 r 1
r=1, provided that all of the points in the
scatter diagram lie exactly on a line
with a positive slope. Also, r = -1,
provided that all of the points lie
exactly on a line with a negative slope
Suppose r 0. Then the points in the scatter
diagram are grouped around a nonhorizontal
line (regression line). If r is positive, the line is
sloping upward to the right. If r is negative, the
line is sloping downward to the right. The closer
r is t 1 or -1, the closer the points tend to cluster
about the line. Therefore, a value of r close to
1 or -1 indicates a strong degree of linear
relationship.
If the value of r=0, there is no linear relationship
between the x and y values for the data.
When r=0, it can be shown that the line of best
fit is a horizontal line through the points.
TEST OF HYPOTHESIS
PROBLEMS
1. Find the linear correlation coefficient for the
salary data in Table 11.2. Interpret the result.
2. Find the linear correlation coefficient for the
production cost data in Table 11.3.
3. The heights and weights of n = 10 offensive
backfield football players are randomly
selected from a countrys football all-stars.
Calculate the correlation coefficient for the
heights (in inches) and weights (in pounds)
given in Table 11.4.
4. Refer to the height and weight data in Problem
3. The correlation of height and weight was
calculated to be r = 0.8261. Is this correlation
significantly different from 0? Calculate at 1%
level of significance, t at 0.01