SIMPLE LINEAR REGRESSION AND MEASURES OF CORRELATION

Prepared by: Carmela S. Obayan

TOPIC OUTLINE
1. Simple Linear Regression A. The Scatter Diagram B. The Least Squares Linear Regression Equation C. The Standard Error of Estimate

2. Measures of Correlation A. Description of Correlation B. Correlation Between Interval Data 1. Pearson r from Raw Scores 2. Pearson r Computed from Standard Scores 3. Pearson r Computed by the Method Difference

TOPIC OUTLINE
C. Correlation Between Ordinal Data 1. Spearman Rho 2. Gamma D. Correlation Between an Interval and Nominal Data 1. The Correlation Ratio 2. The point-Biseral Ordinal Data 3. The Z-test 4. The t- test

SCATTER DIAGRAM
A graphical approach in solving problems that concern estimation and forecasting

SCATTER DIAGRAM

A graphical approach in solving problems that concern estimation and forecasting. Consist of joining points corresponding to the paired scores of dependent and independent variables.

EXAMPLE:

Working Experience and Income of 8 Employees

Years of Working Experience (X) Income in Thousand of Pesos(Y)

Employees

A B C D E F G H

2 8 4 11 5 13 4 15

8 10 11 13 9 17 8 14

SCATTER DIAGRAM
Working Experience and Income of 8 Employees

THE LEAST SQUARE LINEAR REGRESSION

If a straight line appears to describe the relationship, the regression formula can be used.

Y = a + bx

THE LEAST SQUARE LINEAR REGRESSION

b = (X X)(Y Y) (X X)2

a = Y - bX

STANDARD ERROR ESTIMATE

The distance of the Y values from Y1. Se = Y2 a(Y)b(XY)

n - 2

MEASURES OF CORRELATION

When the degree of relationship is measured, correlation is basically the test of measurement.

MEASURES OF CORRELATION

The two variables tend to vary together; the presence of one indicates the presence of the other; one can be predicted from the presence of the other.

MEASURES OF CORRELATION

The degree of relationship between variables is expressed into: 1. Perfect Correlation 2. Some degree of Correlation 3. No Correlation

MEASURES OF CORRELATION
REMINDERS:

The relationship of two variables does not necessarily mean that one is the cause or the effect of the other variable.

MEASURES OF CORRELATION
REMINDERS:

When the computed r is high, it does not necessarily mean that one factor is strongly dependent on the other.
On the other hand, when the computed r is small it does not necessarily mean that one factor has no dependence on the other factor.

EXAMPLE:

Given set of scores X and Y, find Pearson r X Y

10 14 8

A B C

18 16 14

D
E F G H

13
12 10 10 8

12
10 8 7 6

I J

6 3

5 0

r THE PEARSON R FROM THE RAW SCORES

r =

NXY XY [NX2-(X)2][NY2-(Y)2]

r THE PEARSON R FROM THE STANDARD SCORES

Step 1 = Solve X and Y X = X N Y = Y N

r THE PEARSON R FROM THE STANDARD SCORES

Step 3 = Find the standard deviation of X and Y

Sx = X2 N Sy = Y2 N

r THE PEARSON R FROM THE STANDARD SCORES

Step 4 = Find the values standard scores of X and Y

Zx = X-X S Zy = Y-Y S

r THE PEARSON R FROM THE STANDARD SCORES

Step 5 = Multiply ZX and ZY

r = ZX-ZY N

r THE PEARSON R FROM BY THE METHOD OF DIFFERENCES

r =

2 Sx

2 Sy

2SxSy

2 Sd

r THE PEARSON R FROM BY THE METHOD OF DIFFERENCES

2 X

= X2(X)2

N
2 Y

=
N

2(Y)2 Y

r THE PEARSON R FROM THE STANDARD SCORES

Sx = X2 N Sy = Y2 N

r THE PEARSON R FROM THE STANDARD SCORES

2 D

2 D

2 (D)

r THE PEARSON R FROM BY THE METHOD OF DIFFERENCES

r =

2 Sx

2 Sy

2SxSy

2 Sd

CORRELATION BETWEEN ORDINAL DATA

Spearman Rho
o This is the Spearman rank-order correlation coefficient (Rho).

CORRELATION BETWEEN ORDINAL DATA

o

For cases of 30 or less, Spearman p is the most widely used of the rank correlation methods.

CORRELATION BETWEEN ORDINAL DATA

p = 1 6D2

N(N2 1)

CORRELATION BETWEEN ORDINAL DATA

Gamma
o An alternative to the rank-order correlation coefficient is the Goodmans and Kruskals gamma (G).

CORRELATION BETWEEN ORDINAL DATA

G = Ns N1
Ns + N1

CORRELATION BETWEEN ORDINAL DATA

Step 1 Arrange the ordering for one of the two characteristics from the highest to the highest to the lowest or vice versa from the top to the bottom through the rows and for the other characteristic from the highest to the lowest or vice versa from left to right through the column.

CORRELATION BETWEEN ORDINAL DATA

Step 2 Compute Ns by multiplying the frequency in every cell by the series of the frequencies in all