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Correlation

Correlation. (Click icon for audio). Correlation Coefficient. Statistical measure of the co-variation or association between two variables The correlation coefficient for two variables, X and Y is:

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Correlation

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  1. Correlation (Click icon for audio) Dr. Michael R. Hyman, NMSU

  2. Correlation Coefficient • Statistical measure of the co-variation or association between two variables • The correlation coefficient for two variables, X and Y is: • Sample question to test for statistical and managerial significance: Are dollar sales associated with advertising dollar expenditures?

  3. Correlation Does Not Mean Causation • Rooster’s crow and the rising of the sun • Rooster does not cause the sun to rise. • Teachers’ salaries and liquor consumption • Co-vary because both are influenced by a third variable (e.g., state of economy) Examples: High correlations without causation

  4. Possible Values for • r ranges from +1 to -1 • r = +1: a perfect positive linear relationship • r = -1: a perfect negative linear relationship • r = 0: no correlation

  5. Correlation Patterns

  6. Simple Correlation Coefficient

  7. = Variance of X = Variance of Y = Covariance of X and Y Simple Correlation Coefficient

  8. Coefficient of Determination

  9. Correlation Matrix Standard form for reporting correlation results

  10. Correlation Matrix

  11. Correlation for Ordinal Data

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