Statistics for

Business and Economics

8th Global Edition

Chapter 2

Using Numerical Measures to

Describe Data
Copyright © 2013 Pearson Education Ch. 2-1
 Chapter Goals
After completing this chapter, you should be able to:
 Compute and interpret the mean, median, and mode for a
set of data
 Find the range, variance, standard deviation, and
coefficient of variation and know what these values mean
 Apply the empirical rule to describe the variation of
population values around the mean
 Explain the weighted mean and when to use it
 Explain how a least squares regression line estimates a
linear relationship between two variables

Copyright © 2013 Pearson Education Ch. 2-2

 Describing Data Numerically
Describing Data Numerically

Central Tendency Variation

Arithmetic Mean Range

Median Interquartile Range

Mode Variance

Standard Deviation

Coefficient of Variation

Copyright © 2013 Pearson Education Ch. 2-3

 2.1
Measures of Central Tendency
Overview
Central Tendency

Mean Median Mode

x i
x i1
n
Arithmetic Midpoint of Most frequently
average ranked values observed value
(if one exists)
Copyright © 2013 Pearson Education Ch. 2-4
 Arithmetic Mean
 The arithmetic mean (mean) is the most
common measure of central tendency
 For a population of N values:
N

xx1  x 2    xN
i Population
μ 
i1
values
N N
Population size

 For a sample of size n:

n

x i
x1  x 2    xn Observed
x i1
 values
n n
Sample size
Copyright © 2013 Pearson Education Ch. 2-5
 Arithmetic Mean
(continued)

 The most common measure of central tendency

 Mean = sum of values divided by the number of values
 Affected by extreme values (outliers)

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Mean = 3 Mean = 4
1  2  3  4  5 15 1  2  3  4  10 20
 3  4
5 5 5 5

Copyright © 2013 Pearson Education Ch. 2-6

 Median
 In an ordered list, the median is the “middle”
number (50% above, 50% below)

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Median = 3 Median = 3

 Not affected by extreme values

Copyright © 2013 Pearson Education Ch. 2-7

 Finding the Median

 The location of the median:

th
 n  1
Median position    positionin the ordered data
 2 
 If the number of values is odd, the median is the middle number
 If the number of values is even, the median is the average of
the two middle numbers

n 1
 Note that is not the value of the median, only the
2
position of the median in the ranked data

Copyright © 2013 Pearson Education Ch. 2-8

 Mode
 A measure of central tendency
 Value that occurs most often
 Not affected by extreme values
 Used for either numerical or categorical data
 There may may be no mode
 There may be several modes

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 0 1 2 3 4 5 6

No Mode
Mode = 9
Copyright © 2013 Pearson Education Ch. 2-9
 Review Example

 Five houses on a hill by the beach

$2,000 K
House Prices:

$2,000,000
500,000 $500 K
300,000 $300 K
100,000
100,000

$100 K

$100 K

Copyright © 2013 Pearson Education Ch. 2-10

 Review Example:
Summary Statistics

House Prices:
 Mean: ($3,000,000/5)
$2,000,000 = $600,000
500,000
300,000
100,000
100,000  Median: middle value of ranked data
Sum 3,000,000
= $300,000

 Mode: most frequent value

= $100,000

Copyright © 2013 Pearson Education Ch. 2-11

 Which measure of location
is the “best”?

 Mean is generally used, unless extreme

values (outliers) exist . . .
 Then median is often used, since the median
is not sensitive to extreme values.
 Example: Median home prices may be reported for
a region – less sensitive to outliers

Copyright © 2013 Pearson Education Ch. 2-12

 Shape of a Distribution

 Describes how data are distributed

 Measures of shape
 Symmetric or skewed

Left-Skewed Symmetric Right-Skewed

Mean < Median Mean = Median Median < Mean

Copyright © 2013 Pearson Education Ch. 2-13

 Percentiles and Quartiles

 Percentiles and Quartiles indicate the position of a

value relative to the entire set of data

 Generally used to describe large data sets

 Example: An IQ score at the 90th percentile means that 10%

of the population has a higher IQ score and 90% have a lower
IQ score.

Pth percentile = value located in the (P/100)(n + 1)th

ordered position

Copyright © 2013 Pearson Education Ch. 2-14

 Quartiles
 Quartiles split the ranked data into 4 segments with
an equal number of values per segment (note that
the widths of the segments may be different)

25% 25% 25% 25%

Q1 Q2 Q3
 The first quartile, Q1, is the value for which 25% of the
observations are smaller and 75% are larger
 Q2 is the same as the median (50% are smaller, 50% are
larger)
 Only 25% of the observations are greater than the third
quartile

Copyright © 2013 Pearson Education Ch. 2-15

 Quartile Formulas

Find a quartile by determining the value in the

appropriate position in the ranked data, where

First quartile position: Q1 = 0.25(n+1)

Second quartile position: Q2 = 0.50(n+1)

(the median position)

Third quartile position: Q3 = 0.75(n+1)

where n is the number of observed values

Copyright © 2013 Pearson Education Ch. 2-16

 Quartiles

 Example: Find the first quartile

Sample Ranked Data: 11 12 13 16 16 17 18 21 22

(n = 9)
Q1 = is in the 0.25(9+1) = 2.5 position of the ranked data
so use the value half way between the 2nd and 3rd values,

so Q1 = 12.5

Copyright © 2013 Pearson Education Ch. 2-17

 Five-Number Summary

The five-number summary refers to five descriptive

measures:
minimum
first quartile
median
third quartile
maximum

minimum < Q1 < median < Q3 < maximum

Copyright © 2013 Pearson Education Ch. 2-18

 2.2
Measures of Variability

Variation

Range Interquartile Variance Standard Coefficient of

Range Deviation Variation

 Measures of variation give

information on the spread
or variability of the data
values.

Same center,
different variation
Copyright © 2013 Pearson Education Ch. 2-19
 Range

 Simplest measure of variation

 Difference between the largest and the smallest
observations:

Range = Xlargest – Xsmallest

Example:

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Range = 14 - 1 = 13

Copyright © 2013 Pearson Education Ch. 2-20

 Disadvantages of the Range
 Ignores the way in which data are distributed

7 8 9 10 11 12 7 8 9 10 11 12
Range = 12 - 7 = 5 Range = 12 - 7 = 5

 Sensitive to outliers
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
Range = 5 - 1 = 4

1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
Range = 120 - 1 = 119

Copyright © 2013 Pearson Education Ch. 2-21

 Interquartile Range

 Can eliminate some outlier problems by using

the interquartile range

 Eliminate high- and low-valued observations

and calculate the range of the middle 50% of
the data

 Interquartile range = 3rd quartile – 1st quartile

IQR = Q3 – Q1

Copyright © 2013 Pearson Education Ch. 2-22

 Interquartile Range

 The interquartile range (IQR) measures the

spread in the middle 50% of the data

 Defined as the difference between the

observation at the third quartile and the
observation at the first quartile

IQR = Q3 - Q1

Copyright © 2013 Pearson Education Ch. 2-23

 Box-and-Whisker Plot

 A box-and-whisker plot is a graph that describes the

shape of a distribution
 Created from the five-number summary: the
minimum value, Q1, the median, Q3, and the
maximum
 The inner box shows the range from Q1 to Q3, with a
line drawn at the median
 Two “whiskers” extend from the box. One whisker is
the line from Q1 to the minimum, the other is the line
from Q3 to the maximum value

Copyright © 2013 Pearson Education Ch. 2-24

 Box-and-Whisker Plot
The plot can be oriented horizontally or vertically

Example:
Median X
X Q1 Q3 maximum
minimum (Q2)
25% 25% 25% 25%

12 30 45 57 70

Copyright © 2013 Pearson Education Ch. 2-25

 Population Variance

 Average of squared deviations of values from

the mean
N
 Population variance:
 (x  μ)
i
2

σ 2 i1
N
Where μ = population mean
N = population size
xi = ith value of the variable x
Copyright © 2013 Pearson Education Ch. 2-26
 Sample Variance

 Average (approximately) of squared deviations

of values from the mean
n
 Sample variance:
 (x  x)i
2

s 
2 i 1
n -1
Where X = arithmetic mean
n = sample size
Xi = ith value of the variable X
Copyright © 2013 Pearson Education Ch. 2-27
 Population Standard Deviation

 Most commonly used measure of variation

 Shows variation about the mean
 Has the same units as the original data

 Population standard deviation:

 i
(x  μ) 2

σ i1
N
Copyright © 2013 Pearson Education Ch. 2-28
 Sample Standard Deviation

 Most commonly used measure of variation

 Shows variation about the mean
 Has the same units as the original data

 (x  x)
 Sample standard deviation: 2
i
S i1
n -1

Copyright © 2013 Pearson Education Ch. 2-29

 Calculation Example:
Sample Standard Deviation
Sample
Data (xi) : 10 12 14 15 17 18 18 24
n=8 Mean = x = 16

(10  X)2  (12  x)2  (14  x)2    (24  x)2

s
n 1

(10  16)2  (12  16)2  (14  16)2    (24  16)2


8 1

130 A measure of the “average”

  4.3095
7 scatter around the mean
Copyright © 2013 Pearson Education Ch. 2-30
 Measuring variation

Small standard deviation

Large standard deviation

Copyright © 2013 Pearson Education Ch. 2-31

 Comparing Standard Deviations
Mean = 15.5 for each data set

11 12 13 14 15 16 17 18 19 20 21
s = 3.338
(compare to the two
Data A cases below)

11 12 13 14 15 16 17 18 19 20 21
s = 0.926
(values are concentrated
Data B near the mean)

s = 4.570
11 12 13 14 15 16 17 18 19 20 21 (values are dispersed far
Data C from the mean)

Copyright © 2013 Pearson Education Ch. 2-32

 Advantages of Variance and
Standard Deviation

 Each value in the data set is used in the

calculation

 Values far from the mean are given extra

weight
(because deviations from the mean are squared)

Copyright © 2013 Pearson Education Ch. 2-33

 Comparing Coefficient
of Variation
 Stock A:
 Average price last year = $50

 Standard deviation = $5

s  $5
CVA    100%  100%  10%
x  $50 Both stocks
 Stock B: have the same
standard
 Average price last year = $100 deviation, but
stock B is less
 Standard deviation = $5 variable relative
to its price
s  $5
CVB    100%  100%  5%
x  $100
Copyright © 2013 Pearson Education Ch. 2-34
 Chebychev’s Theorem

 For any population with mean μ and

standard deviation σ , and k > 1 , the
percentage of observations that fall within
the interval
[μ + kσ]
Is at least

100[1 (1/k )]%

2

Copyright © 2013 Pearson Education Ch. 2-35

 Chebychev’s Theorem
(continued)

 Regardless of how the data are distributed, at

least (1 - 1/k2) of the values will fall within k
standard deviations of the mean (for k > 1)
 Examples:

At least within
(1 - 1/1.52) = 55.6% ……... k = 1.5 (μ ± 1.5σ)
(1 - 1/22) = 75% …........... k = 2 (μ ± 2σ)
(1 - 1/32) = 89% …….…... k = 3 (μ ± 3σ)

Copyright © 2013 Pearson Education Ch. 2-36

 The Empirical Rule

 If the data distribution is bell-shaped, then

the interval:
 μ  1σ contains about 68% of the values in
the population or the sample

68%

μ
μ  1σ
Copyright © 2013 Pearson Education Ch. 2-37
 The Empirical Rule
(continued)
 μ  2σ contains about 95% of the values in
the population or the sample
 μ  3σ contains almost all (about 99.7%) of
the values in the population or the sample

95% 99.7%

μ  2σ μ  3σ

Copyright © 2013 Pearson Education Ch. 2-38

 z-Score

A z-score shows the position of a value

relative to the mean of the distribution.
 indicates the number of standard deviations a
value is from the mean.
 A z-score greater than zero indicates that the value is
greater than the mean
 a z-score less than zero indicates that the value is
less than the mean
 a z-score of zero indicates that the value is equal to
the mean.
Copyright © 2013 Pearson Education Ch. 2-39
 z-Score
(continued)

 If the data set is the entire population of data

and the population mean, µ, and the population
standard deviation, σ, are known, then for each
value, xi, the z-score associated with xi is

xi - μ
z
σ

Copyright © 2013 Pearson Education Ch. 2-40

 z-Score
(continued)
 If intelligence is measured for a population
using an IQ score, where the mean IQ score
is 100 and the standard deviation is 15, what
is the z-score for an IQ of 121?

x i - μ 121 - 100
z   1.4
σ 15
A score of 121 is 1.4 standard
deviations above the mean.

Copyright © 2013 Pearson Education Ch. 2-41

 2.3
Weighted Mean
and Measures of Grouped Data

 The weighted mean of a set of data is

n

w x i i
w1x1  w 2 x 2    w n xn
x i1

n n
 Where wi is the weight of the ith observation
and n  w i

 Use when data is already grouped into n classes, with

wi values in the ith class

Copyright © 2013 Pearson Education Ch. 2-42

 Approximations for Grouped Data
Suppose data are grouped into K classes, with
frequencies f1, f2, . . ., fK, and the midpoints of the
classes are m1, m2, . . ., mK

 For a sample of n observations, the mean is

K

 fm i i
K
where n   fi
x i 1
i 1
n

Copyright © 2013 Pearson Education Ch. 2-43

 Approximations for Grouped Data
Suppose data are grouped into K classes, with
frequencies f1, f2, . . ., fK, and the midpoints of the
classes are m1, m2, . . ., mK

 For a sample of n observations, the variance is

K

i i
f (m  x)2

s2  i1
n 1

Copyright © 2013 Pearson Education Ch. 2-44

 Example: Apartment Rents

Seventy apartments were

randomly sampled in a small
university town. The monthly
rents for these apartments
are listed in ascending
order on the next slide.

Copyright © 2013 Pearson Education Ch. 2-45

 Example: Apartment Rents

425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

Copyright © 2013 Pearson Education Ch. 2-46

 Sample Mean

x  x

34, 356
i
 490.80
n 70

425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

Copyright © 2013 Pearson Education Ch. 2-47

 Median
Averaging the 35th and 36th data values:
Median = (475 + 475)/2 = 475

425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

Copyright © 2013 Pearson Education Ch. 2-48

 Mode
450 occurred most frequently (7 times)
Mode = 450

425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

Copyright © 2013 Pearson Education Ch. 2-49

 Range

Range = largest value - smallest value

Range = 615 - 425 = 190
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

Copyright © 2013 Pearson Education Ch. 2-50

 Interquartile Range

3rd Quartile (Q3) = 525

1st Quartile (Q1) = 445
Interquartile Range = Q3 - Q1 = 525 - 445 = 80
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

Copyright © 2013 Pearson Education Ch. 2-51

 Box Plot

 A box is drawn with its ends located at the first and

third quartiles.
 A vertical line is drawn in the box at the location of
the median (second quartile).

375 400 425 450 475 500 525 550 575 600 625

Q1 = 445 Q3 = 525
Q2 = 475
 Box Plot

 Limits are located (not drawn) using the interquartile

range (IQR).
 Data outside these limits are considered outliers.
 The location of each outlier is shown by a suitable
symbol, e.g. * .
… continued
 Box Plot

 The lower limit is located 1.5(IQR) below Q1.

Lower Limit: Q1 - 1.5(IQR) = 445 - 1.5(75) = 332.5

 The upper limit is located 1.5(IQR) above Q3.

Upper Limit: Q3 + 1.5(IQR) = 525 + 1.5(75) = 637.5

 There are no outliers (values less than 332.5 or

greater than 637.5) in the apartment rent data.
 Box Plot

 Whiskers (dashed lines) are drawn from the ends of

the box to the smallest and largest data values inside
the limits.

375 400 425 450 475 500 525 550 575 600 625

Smallest value Largest value

inside limits = 425 inside limits = 615
 Variance, Standard Deviation,
And Coefficient of Variation
 Variance

s2   (x
i  x ) 2
 2, 996.16
n1

 Standard Deviation
the standard
deviation is
s  s 2  2996.47  54.74
about 11% of
of the mean
 Coefficient of Variation

 s   54.74 
  100  %    100  %  11.15%
x   490.80 

Copyright © 2013 Pearson Education Ch. 2-56

 Chebyshev’s Theorem
For example:
Let k = 1.5 with x = 490.80 and s = 54.74

At least (1  1/(1.5)2) = 1  0.44 = 0.56 or 56%

of the rent values must be between
x - k(s) = 490.80  1.5(54.74) = 409
and
x + k(s) = 490.80 + 1.5(54.74) = 573

(Actually, 86% of the rent values

are between 409 and 573.)

Copyright © 2013 Pearson Education Ch. 2-57

 Z-Score
 z-Score of Smallest Value (425)
xi  x 425  490.80
z   1. 20
s 54. 74
Standardized Values for Apartment Rents

-1.20 -1.11 -1.11 -1.02 -1.02 -1.02 -1.02 -1.02 -0.93 -0.93
-0.93 -0.93 -0.93 -0.84 -0.84 -0.84 -0.84 -0.84 -0.75 -0.75
-0.75 -0.75 -0.75 -0.75 -0.75 -0.56 -0.56 -0.56 -0.47 -0.47
-0.47 -0.38 -0.38 -0.34 -0.29 -0.29 -0.29 -0.20 -0.20 -0.20
-0.20 -0.11 -0.01 -0.01 -0.01 0.17 0.17 0.17 0.17 0.35
0.35 0.44 0.62 0.62 0.62 0.81 1.06 1.08 1.45 1.45
1.54 1.54 1.63 1.81 1.99 1.99 1.99 1.99 2.27 2.27

Copyright © 2013 Pearson Education Ch. 2-58

 Detecting Outliers
 An outlier is an unusually small or unusually large
value in a data set.
 A data value with a z-score less than -3 or greater
than +3 might be considered an outlier.
 It might be:
• an incorrectly recorded data value
• a data value that was incorrectly included in the
data set
• a correctly recorded data value that belongs in
the data set
 Detecting Outliers
 The most extreme z-scores are -1.20 and 2.27
 Using |z| > 3 as the criterion for an outlier, there are
no outliers in this data set.
Standardized Values for Apartment Rents
-1.20 -1.11 -1.11 -1.02 -1.02 -1.02 -1.02 -1.02 -0.93 -0.93
-0.93 -0.93 -0.93 -0.84 -0.84 -0.84 -0.84 -0.84 -0.75 -0.75
-0.75 -0.75 -0.75 -0.75 -0.75 -0.56 -0.56 -0.56 -0.47 -0.47
-0.47 -0.38 -0.38 -0.34 -0.29 -0.29 -0.29 -0.20 -0.20 -0.20
-0.20 -0.11 -0.01 -0.01 -0.01 0.17 0.17 0.17 0.17 0.35
0.35 0.44 0.62 0.62 0.62 0.81 1.06 1.08 1.45 1.45
1.54 1.54 1.63 1.81 1.99 1.99 1.99 1.99 2.27 2.27
 Sample Mean for Grouped Data

Given below is the sample of monthly rents for 70 apartments,

presented here as grouped data in the form of a frequency
distribution.
Rent (€) Frequency
420-439 8
440-459 17
460-479 12
480-499 8
500-519 7
520-539 4
540-559 2
560-579 4
580-599 2
600-619 6
Copyright © 2013 Pearson Education Ch. 2-61
 Sample Mean for Grouped Data

Rent (€) fi Mi f iMi

34, 525
420-439 8 429.5 3436.0 x  493.21
440-459 17 449.5 7641.5 70
460-479 12 469.5 5634.0 This approximation
480-499 8 489.5 3916.0 differs by €2.41 from
500-519 7 509.5 3566.5
the actual sample
520-539 4 529.5 2118.0
540-559 2 549.5 1099.0 mean of €490.80.
560-579 4 569.5 2278.0
580-599 2 589.5 1179.0
600-619 6 609.5 3657.0
Total 70 34525.0

Copyright © 2013 Pearson Education Ch. 2-62

 Sample Variance for Grouped Data

Rent (€) fi Mi Mi - x (M i - x )2 f i (M i - x )2
420-439 8 429.5 -63.7 4058.96 32471.71
440-459 17 449.5 -43.7 1910.56 32479.59
460-479 12 469.5 -23.7 562.16 6745.97
480-499 8 489.5 -3.7 13.76 110.11
500-519 7 509.5 16.3 265.36 1857.55
520-539 4 529.5 36.3 1316.96 5267.86
540-559 2 549.5 56.3 3168.56 6337.13
560-579 4 569.5 76.3 5820.16 23280.66
580-599 2 589.5 96.3 9271.76 18543.53
600-619 6 609.5 116.3 13523.36 81140.18
Total 70 208234.29
continued

Copyright © 2013 Pearson Education Ch. 2-63

 Sample Variance for Grouped Data

 Sample Variance

s2 = 208,234.29/(70 – 1) = 3,017.89
 Sample Standard Deviation

s  3,017.89  54.94

This approximation differs by only €0.20

from the actual standard deviation of €54.74.

Copyright © 2013 Pearson Education Ch. 2-64

 2.4
Measures of Relationships
Between Variables

Two measures of the relationship between

variable are

 Covariance
 a measure of the direction of a linear relationship
between two variables

 Correlation Coefficient
 a measure of both the direction and the strength of a
linear relationship between two variables

Copyright © 2013 Pearson Education Ch. 2-65

 Covariance
 The covariance measures the strength of the linear relationship
between two variables

 The population covariance:

N

 (x   i x )(yi   y )
Cov (x , y)   xy  i1
N
 The sample covariance:
n

 (x  x)(y  y)
i i
Cov (x , y)  sxy  i1
n 1
 Only concerned with the strength of the relationship
 No causal effect is implied
Copyright © 2013 Pearson Education Ch. 2-66
 Interpreting Covariance

 Covariance between two variables:

Cov(x,y) > 0 x and y tend to move in the same direction

Cov(x,y) < 0 x and y tend to move in opposite directions

Cov(x,y) = 0 x and y are independent

Copyright © 2013 Pearson Education Ch. 2-67

 Coefficient of Correlation
 Measures the relative strength of the linear relationship
between two variables

 Population correlation coefficient:

Cov (x , y)
ρ
σXσY
 Sample correlation coefficient:
Cov (x , y)
r
sX sY

Copyright © 2013 Pearson Education Ch. 2-68

 Features of
Correlation Coefficient, r

 Unit free
 Ranges between –1 and 1
 The closer to –1, the stronger the negative linear
relationship
 The closer to 1, the stronger the positive linear
relationship
 The closer to 0, the weaker any positive linear
relationship

Copyright © 2013 Pearson Education Ch. 2-69

 Scatter Plots of Data with Various
Correlation Coefficients
Y Y Y

X X X
r = -1 r = -.6 r=0
Y
Y Y

X X X
r = +1 r = +.3 r=0
Copyright © 2013 Pearson Education Ch. 2-70
 Interpreting the Result

Scatter Plot of Test Scores

 r = .733 100

95

Test #2 Score
 There is a relatively 90

85

strong positive linear 80

relationship between 75

test score #1 70
70 75 80 85 90 95 100

Test #1 Score
and test score #2

 Students who scored high on the first test tended

to score high on second test

Copyright © 2013 Pearson Education Ch. 2-71

 Covariance and Correlation Coefficient

A golfer is interested in investigating

the relationship, if any, between driving
distance and 18-hole score.

Average Driving Average

Distance (metres)18-Hole Score
277.6 69
259.5 71
269.1 70
267.0 70
255.6 71
272.9 69

Copyright © 2013 Pearson Education Ch. 2-72

 Covariance and Correlation Coefficient

x y ( xi  x ) ( yi  y ) ( xi  x )( yi  y )
277.6 69 10.65 -1.0 -10.65
259.5 71 -7.45 1.0 -7.45
269.1 70 2.15 0 0
267.0 70 0.05 0 0
255.6 71 -11.35 1.0 -11.35
272.9 69 5.95 -1.0 -5.95
Mean 267.0 70.0 Total -35.40
Std. Dev. 8.2192 0.8944

Copyright © 2013 Pearson Education Ch. 2-73

 Covariance and Correlation Coefficient

 Sample Covariance

sxy 
 ( x  x )( y
i i  y)

35.40
  7.08
n1 61
 Sample Correlation Coefficient
sxy 7.08
rxy    -0.9631
sx sy (8.2192)(0.8944)

Copyright © 2013 Pearson Education Ch. 2-74