**Correlation**

Correlation
The word "correlation" is made by clubbing the words "co" and "relation". The word
"co" means together, thus, correlation means the relationship between any set of data
when considered together.
Correlation is a process to establish a relationship between two variables. In statistics
under relation and functions, methods of correlation summarize the relationship
between two variables in a single unitless number called the correlation coefficient.
The correlation coefficient is usually represented using the symbol r, and it ranges
from -1 to +1. If the coefficient is close to 0 then the relation between the
relationships between the two numbers is less and when the relationship is far away
from 0 then the relationship is strong between the two variables.

The correlation coefficient close to plus 1 means a positive relationship between the
two variables, with increases in one of the variables being associated with increases in
the other variable. A correlation coefficient close to -1 indicates a negative
relationship between two variables, with an increase in one of the variables being
associated with a decrease in the other variable.

What is a correlation?
A correlation reflects the strength and/or direction of the association between
two or more variables.

 A positive correlation means that both variables change in the same

direction.
 A negative correlation means that the variables change in opposite
directions.
 A zero correlation means there’s no relationship between the variables.
 Correlation Correlation Meaning
coefficient value type

1 Perfect positive When one variable changes, the other

correlation variables change in the same direction.

0 Zero correlation There is no relationship between the

variables.

-1 Perfect negative When one variable changes, the other

correlation variables change in the opposite direction.

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Types of Correlation
There are three classes of correlation in common.

o Positive, negative and no correlation.

o Linear and non-linear correlation.
o Simple, multiple, and partial correlation.

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Positive Correlation
A positive correlation is a relationship between two variables that are directly related
to each other. A positive correlation exists when one variable decreases as the other
variable decreases, or one variable increases while the other increases.

For example, the more money you save, the more financially secure you feel or when
the temperature goes up, the rate at which ice melts also goes up. The graph for a
strong positive correlation would look like this:

Negative Correlation
Negative correlation is a relationship between two variables in which one variable
increases as the other decreases, and vice versa. A perfect negative correlation
means the relationship that exists between two variables is exactly opposite all of the
time. For example, as we climb up a mountain (increase in height) it gets colder
(decrease in temperature). In statistics, a perfect negative correlation is represented
by the value -1.0. The graph for a strong negative correlation would look like this:

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No Correlation
There also exists a condition known as no Correlation, where there is no relation or
dependence between two variables. A zero value of the correlation coefficient
indicates no correlation. The graph for data sets with no correlation would look like
this:

Linear Correlation
Linearity of a correlation is a measure of the degree to which two variables vary
together, or a measure of the intensity of the association between two variables. In
simple words, correlation is said to be linear if the ratio of change of the two variables
is constant, i.e if one of them doubles then the other one doubles or is halved i.e
changes by a factor of 2.

For example, the demand of vegetables and the prices of vegetables or the time
spent on video games and the marks in exams.

Non-linear Correlation
Non-linear or curvilinear correlation is said to occur when the ratio of change between
two variables is not constant. It can happen that as the value of one variable
increases linearly with time, the value of another variable increases exponentially.

Simple Correlation
Simple correlation is a measure used to determine the strength and the direction of
the relationship between two variables, X and Y. A simple correlation coefficient can
range from –1 to 1. However, maximum (or minimum) values of some simple
correlations cannot reach unity (i.e., 1 or –1).

Yield of paddy and the use of fertilizers is an example of simple correlation as yield of
paddy depends on the use of fertilizers i.e. presence of one variable affects another
variable.

Multiple Correlation
In statistics, the coefficient of multiple correlation is a measure of how well a given
variable can be predicted using a linear function of a set of other variables. It is the
correlation between the variable’s values and the best predictions that can be
computed linearly from the predictive variables.

For example, a researcher is interested in computing the correlation between crime

rates in a region and multiple factors like unemployment, illiteracy, substance abuse,
inflation etc.
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Partial Correlation
Partial correlation measures the strength of a relationship between two variables,
while controlling for the effect of one or more other variables.

For example, we might want to see if there is a correlation between the amount of
food eaten and blood pressure, while controlling for weight or amount of exercise.

It’s possible to control for multiple variables (called control variables or covariates).
However, more than one or two is usually not recommended because the more
control variables, the less reliable our test.

Correlation Coefficient Formulas

Correlation coefficients are used in the statistics for measuring how strong a
relationship exists between two variables. There are many types of correlation
coefficient like Pearson’s correlation that are used in linear regression analysis. It is
very much popular and useful in statistics.

The main types of correlation coefficients are given below.

o Pearson Correlation
o Spearman Correlation
o Population Correlation

What is a correlation coefficient?

A correlation coefficient is a single number that describes the strength and
direction of the relationship between your variables.

Properties of Correlation
The main properties of Correlation are listed below.

o The coefficient of correlation cannot take value less than -1 or more than one
+1.

Symbolically,

−1≤r≤+1 or |r|<1

o Coefficients of Correlation are independent of Change of Origin. This property

reveals that if we subtract any constant from all the values of X and Y, it will not
affect the coefficient of correlation.
o Coefficients of Correlation possess the property of symmetry.
o Coefficient of Correlation is independent of Change of Scale. This property
reveals that if we divide or multiply all the values of X and Y, it will not affect the
coefficient of correlation.
o Coefficients of correlation measure only linear correlation between X and Y.
o If two variables X and Y are independent, the coefficient of correlation between
them will be zero.

Difference between Correlation and Regression

Correlation Regression

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 o The degree and direction of o The nature of relationships is
relationship between the variables studied.
are studied.

o If the value of one variable is known o If the value of one variable is known
then the value of the other variable then the value of the other variable
cannot be estimated. can be estimated using functional
relationships.

o Correlation coefficient lies between o Only one regression coefficient can

-1 and 1. be greater than 1.

o Correlation coefficient is o Regression coefficient is

independent of the change of origin independent change of origin but
and scale. not scale.

o It is used to represent the linear o It is used to fit a best line and

relationship between two variables. calculate the value of variable on
the basis of another variable

o The extent upto which two o The impact of a unit change in the
variables move together is known variable on the estimated
determined by correlation variable is indicated by the
coefficient. regression coefficient.

Difference between Correlation and Covariance

Correlation Covariance
o It is a measure of how closely two o It is a measure of how closely two
random variables are connected. random variables change at the
same time.

o Correlation coefficient lies between o Covariance can vary from

-1 and 1. o −∞ to +∞
o −∞ �� +∞

o It is a unit free measure of the o Its unit is assumed to be the

connection between variables since product of the unit two variables.
it is dimensionless.

o It can be deduced by dividing the o Correlation can be deducted from a

calculated covariance by standard covariance.
deviation.

o Correlation coefficient is o Covariance is affected by change of

independent of the change of scale.
origin and scale.

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