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Correlationppt

The document discusses correlation analysis and different types of correlation. It defines correlation as a linear association between two random variables. There are three main types of correlation: 1) Positive and negative correlation depending on whether the variables move in the same or opposite directions. 2) Linear and non-linear correlation based on whether the relationship plots as a straight line or not. 3) Simple, multiple, and partial correlation based on the number of dependent and independent variables. The document also discusses methods of measuring correlation including scatter plots, Pearson's correlation coefficient r, and Spearman's rank correlation coefficient. The correlation coefficient r indicates the strength and direction of the linear relationship between variables.

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Nirav Patel
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51 views

Correlationppt

The document discusses correlation analysis and different types of correlation. It defines correlation as a linear association between two random variables. There are three main types of correlation: 1) Positive and negative correlation depending on whether the variables move in the same or opposite directions. 2) Linear and non-linear correlation based on whether the relationship plots as a straight line or not. 3) Simple, multiple, and partial correlation based on the number of dependent and independent variables. The document also discusses methods of measuring correlation including scatter plots, Pearson's correlation coefficient r, and Spearman's rank correlation coefficient. The correlation coefficient r indicates the strength and direction of the linear relationship between variables.

Uploaded by

Nirav Patel
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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LOGO

CORRELATION ANALYSIS
1101091-1101100 PGDM-B

Introduction
Correlation a LINEAR association between two random variables Correlation analysis show us how to determine both the nature and strength of relationship between two variables When variables are dependent on time correlation is applied Correlation lies between +1 to -1

A zero correlation indicates that there is no relationship between the variables A correlation of 1 indicates a perfect negative correlation A correlation of +1 indicates a perfect positive correlation

Types of Correlation
There are three types of correlation

Types

Type 1

Type 2

Type 3

Type1
Positive Negative
No

Perfect

If two related variables are such that when one increases (decreases), the other also increases (decreases). If two variables are such that when one increases (decreases), the other decreases (increases) If both the variables are independent

Type 2

Linear

Non linear

When plotted on a graph it tends to be a perfect line When plotted on a graph it is not a straight line

Type 3 Simple Multiple Partial

Two independent and one dependent variable One dependent and more than one independent variables One dependent variable and more than one independent variable but only one independent variable is considered and other independent variables are considered constant

Methods of Studying Correlation


Scatter Diagram Method

Karl Pearson Coefficient Correlation of Method

Spearmans Rank Correlation Method

Strong relationship = good linear fit


180 160

Correlation: Linear Relationships


160 140

140

Symptom Index

S ymptom Index
0 50 100 150 200 250

120 100 80 60 40 20 0

120 100 80 60 40 20 0 0 50 100 150 200 250

Drug A (dose in mg)

Drug B (dose in mg)

Very good fit

Moderate fit

Points clustered closely around a line show a strong correlation. The line is a good predictor (good fit) with the data. The more spread out the points, the weaker the correlation, and the less good the fit. The line is a REGRESSSION line (Y = bX + a)

Coefficient of Correlation
A measure of the strength of the linear relationship between two variables that is defined in terms of the (sample) covariance of the variables divided by their (sample) standard deviations

Represented by r
r lies between +1 to -1 Magnitude and Direction

-1 < r < +1 The + and signs are used for positive linear correlations and negative linear correlations, respectively

r xy

n X ( X ) nY (Y )
2 2 2 2

n XY X Y

Shared variability of X and Y variables on the top Individual variability of X and Y variables on the bottom

Interpreting Correlation Coefficient r


strong correlation: r > .70 or r < .70 moderate correlation: r is between .30 & .70 or r is between .30 and .70 weak correlation: r is between 0 and .30 or r is between 0 and .30 .

Coefficient of Determination
Coefficient of determination lies between 0 to 1

Represented by r2
The coefficient of determination is a measure of how well the regression line represents the data If the regression line passes exactly through every point on the scatter plot, it would be able to explain all of the variation The further the line is away from the points, the less it is able to explain

r 2, is useful because it gives the proportion of the variance (fluctuation) of one variable that is predictable from the other variable It is a measure that allows us to determine how certain one can be in making predictions from a certain model/graph
The coefficient of determination is the ratio of the explained variation to the total variation

The coefficient of determination is such that 0 < r 2 < 1, and denotes the strength of the linear association between x and y

The Coefficient of determination represents the percent of the data that is the closest to the line of best fit For example, if r = 0.922, then r 2 = 0.850 Which means that 85% of the total variation in y can be explained by the linear relationship between x and y (as described by the regression equation) The other 15% of the total variation in y remains unexplained

Spearmans rank coefficient


A method to determine correlation when the data

is not available in numerical form and as an


alternative the method, the method of rank

correlation is used. Thus when the values of the


two variables are converted to their ranks, and there from the correlation is obtained, the correlations known as rank correlation.

Computation of Rank Correlation


Spearmans rank correlation coefficient can be calculated when
Actual ranks given Ranks are not given but grades are given but not repeated Ranks are not given and grades are given and repeated

Testing the significance of correlation coefficient

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