Correlation and Regression are the two analysis based on multivariate distribution.

A multivariate
distribution is described as a distribution of multiple variables. Correlation is described as the
analysis which lets us know the association or the absence of the relationship between two variables
‘x’ and ‘y’. On the other end, Regression analysis, predicts the value of the dependent variable
based on the known value of the independent variable, assuming that average mathematical
relationship between two or more variables.

Correlation and Regression are the two analysis based on multivariate distribution. A
multivariate distribution is described as a distribution of multiple variables. Correlation is
described as the analysis which lets us know the association or the absence of the
relationship between two variables ‘x’ and ‘y’. On the other end, Regression analysis,
predicts the value of the dependent variable based on the known value of the independent
variable, assuming that average mathematical relationship between two or more variables.
The difference between correlation and regression is one of the commonly asked questions
in interviews. Moreover, many people suffer ambiguity in understanding these two. So, take
a full read of this article to have a clear understanding on these two.
Comparison Chart
Basis for
Comparison Correlation Regression
Correlation is a statistical measure Regression describes how an
which determines co-relationship independent variable is numerically
Meaning or association of two variables. related to the dependent variable.
To fit a best line and estimate one
To represent linear relationship variable on the basis of another
Usage between two variables. variable.
Dependent and
Independent
variables No difference Both variables are different.
Correlation coefficient indicates the Regression indicates the impact of a
extent to which two variables move unit change in the known variable
Indicates together. (x) on the estimated variable (y).
To find a numerical value To estimate values of random
expressing the relationship variable on the basis of the values of
Objective between variables. fixed variable.

What is the difference between correlation and regression?

The difference between these two statistical measurements is that correlation measures
the degree of a relationship between two variables (x and y), whereas regression is how
one variable affects another.
Basically, you need to know when to use correlation vs regression.
Use correlation for a quick and simple summary of the direction and strength
of the relationship between two or more numeric variables.
Use regression when you’re looking to predict, optimize, or explain a number
response between the variables (how x influences y).

  Correlation Regression

When summarizing
To predict or explain
When to use direct relationship
numeric response
between two variables

Able to quantify
direction of Yes Yes
relationship?

Able to quantify
strength of Yes Yes
relationship?

Able to show cause

No Yes
and effect?

Able to predict and

No Yes
optimize?

X and Y are Yes No

 interchangeable?

Uses a mathematical
No y = a + b (x)
equation?

Regardless of what you’re using correlation and regression to see, utilizing a

business intelligence platform is the best way to clearly analyze the data
you’re looking at in a way that is easy to pinpoint which actionable insights to
take. Mining your data with a business intelligence platform allows for simple
examination of big data, real-time data, and unstructured data and determine
areas for improvement and other notable trends.

Tip: If you’re unsure which BI platform is right for your business, check out over 150
unbiased reviews of business intelligence software from your peers who use this
software daily.
If you aren't looking for business intelligence software, but are still hoping to
calculate correlation and regression, you're able to find both using
various Excel formulas. Just keep in mind that a BI platform is your best bet
for increased efficiency and accuracy. 

What is correlation?
When it comes to correlation, think of it as the combination of the words “co”
meaning together and “relation” meaning a connection between two
quantities.
In this sense, correlation is when a change to one variable is then followed by
a change in another variable, whether it be direct or indirect. Variables are
considered “uncorrelated” when a change in one does not affect the other. In
short, it measures the relationship between two variables.

For example, let’s say our two variables are x and y. The changes between
these two variables can be considered positive or negative. A positive change
would be when two variables move in the same direction, meaning an
increase in one variable results in an increase in another variable. So, if an
increase in x increases y, it’s positively correlated.

An example of this would be demand and price. This is because an increase

in demand causes the corresponding increase in price. The price would
increase because there are more consumers who want it are willing to pay
more for it.

If two variables are moving in opposite directions, like when an increase in

one variable results in a decrease in another, this is known as a negative
correlation. An example of a negative correlation would be the price and
demand for a product because an increase in price (x) results in a decrease in
demand (y).

Knowing how two variables are correlated allows for predicting trends in the
future, as you’ll be able to understand the relationship between the variables
— or if there's no relationship at all.

Correlation analysis
The main purpose of correlation, through the lens of correlation analysis, is to
allow experimenters to know the association or the absence of a relationship
between two variables. When these variables are correlated, you’ll be able to
measure the strength of their association.

Overall, the objective of correlation analysis is to find the numerical value that
shows the relationship between the two variables and how they move
together.

One key benefit of correlation is that it is a more concise and clear summary
of the relationship between the two variables than you’ll find with regression.

Example of correlation
A correlation chart, also known as a scatter diagram, makes it easier to
visually see the correlation between two variables. Data in a correlation chart
is represented by a single point. In the chart above you can see that
correlation plots various points of single data.

Let's think of correlation as real-life scenarios. In addition to the price and

demand example above, let's take a look at correlation from a marketing
standpoint to see the strength of a relationship between the two variables. For
instance, it could be in your company's best interest to see if there is a
predictable relationship between the sale of a product and factors like
weather, advertising, and consumer income. 

What is regression?
On the other hand, regression is how one variable affects another, or changes
in a variable that trigger changes in another, essentially cause and effect. It
implies that the outcome is dependent on one or more variables.

For instance, while correlation can be defined as the relationship between two
variables, regression is how they affect each other. An example of this would
be how an increase in rainfall would then cause various crops to grow, just
like a drought would cause crops to wither or not grow at all.

Regression analysis
Regression analysis helps to determine the functional relationship between
two variables (x and y) so that you’re able to estimate the unknown variable to
make future projections on events and goals.
The main objective of regression analysis is to estimate the values of a
random variable (z) based on the values of your known (or fixed) variables
(x and y). Linear regression analysis is considered to be the best fitting line
through the data points. 

The main advantage in using regression within your analysis is that it provides
you with a detailed look of your data (more detailed than correlation alone)
and includes an equation that can be used for predicting and optimizing your
data in the future.

When the line is drawn using regression, we can see two pieces of
information:
Regression formula

A → refers to the y-intercept, the value of y when x = 0

B → refers to the slope, or rise over run
 
The prediction formula used to see how data could look in the future is:
Y = a + b(x)

Example of regression
When it comes to using regression, we at G2 utilize regression to predict
certain trends, like how our traffic is expected to grow over the coming
months.

One person in particular who uses regression is our SEO and Data Analyst,
Sarah Harenberg. Being able to visualize our data, analyze it, see trends,
and predict what the data could look like in the future is a big part of her job.
Many teams at G2 rely on Sarah when they set our team goals and to
understand how our traffic could look in the coming months.

Related: Check out how we grew our organic traffic to 1 million monthly visitors in
under a year!
She also uses those predictions obtained from regression-based models to
set goals for important company metrics, like keyword acquisition. This gives
the company insights on how it is currently trending compared to past growth
trends since the predictions are based on historical data.
Differences between correlation
and regression
There are some key differences between correlation and regression that are
important in understanding the two.

 Regression establishes how x causes y to change, and the results will

change if x and y are swapped. With correlation, x and y are variables
that can be interchanged and get the same result.
 Correlation is a single statistic, or data point, whereas regression is the
entire equation with all of the data points that are represented with a
line.
 Correlation shows the relationship between the two variables, while
regression allows us to see how one affects the other.
 The data shown with regression establishes a cause and effect, when
one changes, so does the other, and not always in the same direction.
With correlation, the variables move together.
Similarities between correlation
and regression
In addition to differences, there are some key similarities between correlation
and regression that can help you to better understand your data.

 Both work to quantify the direction and strength of the relationship

between two numeric variables.
 Any time the correlation is negative, the regression slope (line within the
graph) will also be negative.
 Any time the correlation is positive, the regression slope (line within the
graph) will be positive.