Correlation

Analysis

 Correlation is not concerned with the

relationship between variables; instead it gives
an estimate as to the degree of association
between the variables. Correlation analysis
tests for interdependence of the variables.
Regression
attempts
to
describe
the
dependence of a variable on one (or more)
explanatory variables; it implicitly assumes
that there is a one-way causal effect from
the explanatory variable(s) to the response
variable.

TYPES OF CORRELATION

i. Positive and Negative

ii.Simple, partial and
multiple
iii.Linear and non-linear

Positive Correlation
If the higher scores on X are
generally paired with the higher
scores on Y, and the lower scores on
X are generally paired with the lower
scores on Y, then the direction of the
correlation between two variables is
positive

Negative Correlation
If the higher scores on X are generally
paired with the lower scores on Y,
and the lower scores on X are
generally paired with the higher
scores on Y, then the direction of the
correlation between two variables is
negative.

MULTIPLE & PARTIAL CORRELATION

X1
X2
X3
X4
X5

Yield of rice
Amount of Rainfall
Amount of fertilizers
Type of soil
Advanced technologies used.

Correlation analysis of X1,X2,X3,X4 and X5 is

an example of Multiple Correlation whereas if
we only study the relation between X1 and
X2 it would be an example of Partial
Correlation

Linear and Non-linear

The nature of the graph gives us
the idea of the linear type of
correlation between two
variables. If the graph is in a
straight line, the correlation is
called a "linear correlation" and if
the graph is not in a straight line,
the correlation is non-linear or
curvi-linear.

Methods Of Determining Correlation

Scatter Plot
Karl Pearsons coefficient of
correlation
Spearmans Rank-correlation
coefficient.

Scatter Plot ( Scatter diagram

or dot diagram )
In this method the values of the two
variables are plotted on a graph paper.
One is taken along the horizontal ( (xaxis) and the other along the vertical (yaxis). By plotting the data, we get points
(dots) on the graph which are generally
scattered and hence the name Scatter
Plot.
The manner in which these points are
scattered, suggest the degree and the
direction of correlation.

Karl Pearsons coefficient of

correlation
It gives the numerical expression for the
measure of correlation. it is noted by r
. The value of r gives the magnitude
of correlation and sign denotes its
direction.
Formula for coefficient of correlation :

Karl Pearsons coefficient of

correlation
n

r =
dy)
Where

dx.dy

-(

dx ( dx)

dx)( dy)
x n

dy (

dx = x A
dy = y- B

(deviations of x and y from their assumed

means)

E.G. ( CALCULATION OF KARL

PEARSONS COEFFICIENT OF
CORRELATION)
CALCULATE THE KARL PEARSONS
COEFFICIENT OF CORRELATION FROM
THE FOLLOWING DATA
X

10
0

20
0

30
0

40
0

50
0

60
0

70
0

30

50

60

80

10
0

11
0

13
0

dx

dx

dy

dy

dx.d
y

100

30

200

50

300

60

400

80

500

100

600

110

700

130

x
dx
100 300
200 200
300 100
400 0
(A)
500 100

dx
9000
0
4000
0
1000
0
0

1000
0
600 200 4000
0

y
30
50

dy dy
-50 250
0
-30 900

dx.dy
1500
0
6000

60

-20 400 2000

80 0
(B)
100 20

110 30

900 6000

400 2000

Calculations
r
=
(0x0)

7 x 46000 -

[7 x 280000 0 ]
[ 7x7600 0 ]
=
53200

46000
1960000 x

E.G. (KARL PEARSONS COEFFICIENT

OF CORRELATION)
A COMPANY GIVES ON THE JOB TRANING TO ITS
SALESMEN,FOLLOWED BY A TEST.
IT IS CONSIDERING WHETHER IT SHOULD TERMINATE
THE SERVICES OF ANY SALESMAN WHO DOES NOT
DO WELL IN THE TEST.
FOLLOWING DATA GIVE THE TEST SCORES AND
SALES (IN 1000 Rs ) MADE BY NINE SALES MEN
DURING LAST ONE YEAR.
COMPUTE COEFFICIENT OF CORRELATION BETWEEN
TEST SCORES & SALES.
DOES IT INDICATE TERMINATION OF SERVICES OF
SALESMEN WITH LOW SCORES IS JUSTIFIED.

TEST
SCORE
S (X)
14
19
24
21
26
22
15
20
19

dx

dx SALES
( in
1000
Rs) (Y)
31
36
48
37
50
45
33
41
39

dy

dy dx.dy

TEST
SCORE
S (X)

dx

dy

dy dx.dy

-5
0
5
2
7

dx SALES
( in
1000
Rs) (Y)
25 31
0
36
25 48
4
37
49 50

14
19
24
21
26

-8
-3
9
-2
11

3
-4
1
0

9
16
1
0

6
-6
2
0

64
9
81
4
12
1
36
56
4
0

22
15
20
19 (A)

45
33
41
39 (B)

Calculation
r=

(9)

0.9473

9 x 202 - (9x9)
(9x129) (9) x (9 x 355) 1818 - 81
(1161-81) x
3195 - 81
1737

1080 x 3114

Thank You