Chapter 7

Calculation of Pearson Coefficient of Correlation, r and testing its significance

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 From previous lecture:

SSxy = xy (x) (y) n b = SSxy SSxx SSxx = x2 (x)2 n

and a = y - b x

Todays lecture: we are going to calculate the correlation coefficient of the two variables, x and y, called the Pearson Product Moment Correlation Coefficient, r

The values of SSxy, SSxx, SSyy can also be obtained by using the following basic formulas: NOTE: x and y are denoted as means SSxy = (x x)(y y) for this course only. The line should appear on top of the SSxx = (x x)2 letters x and y. SSyy = (y y)2
But these formulas take longer to make calculations since you have to calculate The means x and y
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Pearson Product Moment Correlation Coefficient, r

r measures the strength of the relationship between two variables: x and y

Examples of different strengths of relationships between variables x and y:

Strong positive correlation

Weak positive correlation

Strong negative correlation

Weak negative correlation

What is the correlation coefficient of the scatterplot below?

The value of r ranges from -1 to +1.

Pearson Product Moment Coefficient of Correlation, r is given by: SSxy r = SSxx SSyy

Example: Calculate the Pearson Product Moment Coefficient of Correlation, r to show the relationship between Maths and Science marks for Form 5A: Maths 35 49 21 39 15 28 25 Science 9 15 7 11 5 8 9

STEP 1: Calculate x, y, xy, x2 Maths, x Science, y xy 35 9 315 49 15 735 21 7 147 39 11 429 15 5 75 28 8 224 25 9 225 x = 212 y = 64 xy = 2150

x2 1225 2401 441 1521 225 784 625

x2 = 7222

y2 81 225 49 121 25 64 81
y2 = 646

STEP 2: Calcute SSxy, SSxx and SSyy

SSxy = xy (x) (y) n = 2150 (212)(64) /7 = 211.7143 SSxx = x2 (x)2 n = 7222 (212)2 / 7 = 801.4286 SSyy = y2 (y)2 n = 646 (64)2 / 7 = 60.8571
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STEP 3: Substitute inside the r formula:

SSxy r = SSxx SSyy =

211.7143 = .96 (801.4286) (60.8571)

The linear correlation coefficient is .96 (rounded to 2 decimal places) Interpretation: Maths and Science marks are strongly correlated. The square of the correlation, called the coefficient of determination, r2 = (.96)2 = .96 indicates that Maths marks account for 96% of the variance of the Science marks in this case.

STEP 4: Test the significance of r obtained by stating the null hypothesis that there are no significant relationship between Maths and Science scores. To test the significance of the r value obtained, you will first need to set the level of significance you wish to test, say at 1% or at p < .01. You can test the hypothesis about the population correlation coefficient using the sample correlation coefficient, r. We can use the t distribution to make this test. n-2 t = r 1 r2 Where n 2 are the degrees of freedom.

The null hypothesis is that the linear correlation coefficient between 2 variables is zero, that is = 0. The alternative hypothesis can be: linear correlation coefficient between the 2 variables is less than zero, < 0 linear correlation coefficient between the 2 variables is more than zero, > 0 linear correlation coefficient between the 2 variables is not equal to zero, 0

State the null hypothesis: ( is the population correlation coefficient) Ho: = 0 (The linear correlation coefficient is zero in the population) H1 : > 0 (The linear correlation coefficient is positive in the population) means One-tailed
(We test H1: the positive correlation coefficient only when it is impossible for the correlation to be negative) (Otherwise we have to test H1: 0, when we wish to test for correlations both positive or negative two-tailed test)

STEP 5: Select the distribution to use. The population distribution for both variables are normally distributed. Hence, we can use the t distribution to perform this test about the linear correlation coefficient STEP 6: Determine the rejection and nonrejection regions
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STEP 6: Determine the rejection and nonrejection regions The significance level you have chosen for this test is 1%. From the alternative hypothesis, we know that the test is right-tailed. Hence Area in the right tail of the t distribution = .01 df = n 2 = 7 2 = 5 From the t distribution table, the critical value of t is 3.365. The rejection and nonrejection regions for this test are as shown below:
Do not Reject Ho Reject Ho

3.365

Critical Value of t

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STEP 7: Calculate the value of the test statistic, t n-2 t = r 1 r2 7-2 t = .96 1 (.96)2 STEP 8: Make a decision The value of the test statistic t = 7.667 is greater than the critical value of t = 3.365 and it falls in the rejection region. Hence, we reject the null hypothesis and conclude that there is a significant, positive linear relationship between Maths and Science marks = 7.667

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Hypothesis
A hypothesis is a specific statement about on aspect of the population e.g. its mean, or its variance. A null hypothesis is a specific statement that indicates that something has a no effect or no difference between two situations. Eg. There is no effect of the treatment on students motivation Or There are no gender differences in Mathematics scores.
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Alternative Hypothesis
An alternative hypothesis is the opposite of the null hypothesis. Eg. There is a relationship between academic achievement and motivation a twotailed hypothesis A one-tail hypothesis only tests on one direction. Eg, There boys are better in Mathematics than girls
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A hypothesis is a statement about the POPULATION and not the sample. You cannot write a hypothesis as:

Ho:

x0
x

This is not correct since can be measured accurately. We need an hypothesis to estimate the population mean . 15

Hypothesis Testing
1. State the null and alternative hypothesis 2. Select the distribution to use 3. Determine the rejection and nonrejection regions 4. Calculate the value of the test statistic 5. Make a decision

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Hypothesis Testing Example using Correlation

Step 1. State the null and alternative hypothesis
Ho: = 0 (The linear correlation coefficient is zero in the population) H1 : > 0 (The linear correlation coefficient is positive in the population) means One-tailed Or H1: 0 (Means two possibilities, > 0 or < 0 => Two tailed test)

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 STEP 2. Select the distribution to use

The population distribution for both variables are normally distributed. Hence, we can use the t distribution to perform this test about the linear correlation coefficient

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STEP 3: Determine the rejection and nonrejection regions

The significance level you have chosen for this test is 1%. From the alternative hypothesis, we know that the test is right-tailed. Hence Area in the right tail of the t distribution = .01 df = n 2 = 7 2 = 5 From the t distribution table, the critical value of t is 3.365. The rejection and nonrejection regions for this test are as shown below:
Do not Reject Ho Reject Ho

3.365

Critical Value of t

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STEP 4: Calculate the value of the test statistic, t n-2

t = r 1 r2 7-2 t = .96 1 (.96)2 = 7.667

STEP 5: Make a decision

The value of the test statistic t = 7.667 is greater than the critical value of t = 3.365 and it falls in the rejection region. Hence, we reject the null hypothesis and conclude that there is a significant, positive linear relationship between Maths and Science marks

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Another way of calculating r using the standard score method

Z r

ZY

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School

Class Size

Achievement Test

Cross-Product

x
A B 25 14

Zx
0.15 -1.53

y
80 98

Zy
0 1.1

Zx.Zy
0 -1.68

C
D E

33
28 20

1.38
0.61 -0.61

50
82 90

-1.84
0.12 0.61

-2.54
0.07 -0.37

Total=120 Mean = 24 s = 6.54

Total = 400 Mean = 80 s = 16.30

Total= -4.52

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Do not Reject HO Reject HO

r critical = -.878

R obtained = -.90 Decision: Sig at p < .05 Significantly negative relationship between Class Size and Achievement Test (r = -.90, p < .05)

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Another method of calculating r using the computational formula

rxy [n x ( x) ][( n y ( y ) ]
2 2 2 2

n xy x y

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Exercise 1
1) Explain the following concept. You may use graphs to illustrate each concept a) Perfect positive linear correlation b) Perfect negative linear correlation c) Strong positive linear correlation d) Strong negative linear correlation e) Weak positive linear correlation f) Weak negative linear correlation g) No linear correlation 2) For a sample data set, the linear correlation coefficient r has a positive value. Which of the following is true about the slope b of the regression line estimated for the same sample data? a) The value of b will be positive b) The value of b will be negative c) The value of b can be positive or negative 3) A population data set produced the following information. N = 250, x = 9880, y = 1456, xy = 85,080 x2 = 485,870 and y2 = 135,675 Find the linear correlation coefficient .

Ans: 0.25
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4) A sample data set produced the following information. N = 10, x = 100, y = 220, xy = 3680 x2 = 1140 and y2 = 25,272

a) Find the linear correlation coefficient r. b) Using the 5% significance level, can you conclude the is different from zero? 5) A sample data set produced the following information. N = 12, x = 66, y = 588, xy = 2244 x2 = 396 and y2 = 58734

a) Find the linear correlation coefficient r. b) Using the 5% significance level, can you conclude the is negative?

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6) The data on ages (in years) and prices (in hundred of dollars for eight cars of a specific model are shown below: Age 8 3 6 Prices 18 94 50 9 2 21 145 5 42 6 36 3 99

a) Do you expect the ages and prices of cars to be positively or negatively related? Explain. b) Calculate the linear correlation coefficient. c) Test at the 5% significance level whether is negative. 7) The following table lists the midterm and final term exam scores for 7 students in a statistics class. Midterm score 79 Final Exam score 85 95 97 81 78 66 76 87 94 94 84 59 67

a) Do you expect the midterm and final exam scores to be positively or negatively correlated? b) Plot a scatter diagram. By looking at the scatter diagram, do you expect the correlation coefficient between these 2 variables to be close to zero, 1, or -1. c) Find the correlation coefficient. Is the value of r consistent with what you expected in parts a and b? d) Using the 1% significance level, test whether the linear correlation coefficient is Positive.

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