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Meaning of Correlation: Correlation: If The Change in One Variable Affects A Change in

This document discusses different types of correlation between variables. It defines correlation as a change in one variable affecting change in another. Positive correlation means variables change in the same direction, while negative correlation means they change in opposite directions. Correlation can be linear, where change ratios are constant, or non-linear. Simple correlation involves two variables, multiple correlation involves three or more, and partial correlation holds some variables constant. Methods to find correlation include graphs, scatter diagrams, and algebraic formulas like Karl Pearson's.

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Kunal Das
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58 views

Meaning of Correlation: Correlation: If The Change in One Variable Affects A Change in

This document discusses different types of correlation between variables. It defines correlation as a change in one variable affecting change in another. Positive correlation means variables change in the same direction, while negative correlation means they change in opposite directions. Correlation can be linear, where change ratios are constant, or non-linear. Simple correlation involves two variables, multiple correlation involves three or more, and partial correlation holds some variables constant. Methods to find correlation include graphs, scatter diagrams, and algebraic formulas like Karl Pearson's.

Uploaded by

Kunal Das
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Meaning of Correlation

 Correlation: If the change in one variable affects a change in


the other variable, the variables are said to be correlated.

 Examples:
1. Income(X-variable) & Expenditure(Y-variable)[positive]
2. Price of a commodity(X) & demand of a commodity(Y)[-ve]
Types of Correlation

1. Positive & Negative correlation.


2. Linear and Non-linear correlation.
3. Simple, Partial & Multiple Correlation.
Positive & Negative correlation

1. Positive Correlation : If two variables deviate in the same direction,


correlation is said to be direct or positive. i.e increase(or decrease) in one
results in a corresponding increase(or decrease) in the other.e.g:
(i) Heights & weights of a group of persons
(ii) Income & Expenditure
2. Negative correlation: If two variables deviate in opposite
directions, correlation is said to be diverse or negative. i.e
Increase (or decrease ) in one results in a corresponding
decrease(or increase) in the other. e.g:
(i) Price & demand of a commodity
(ii) Volume & Pressure of a perfect gas
Linear and Non-linear correlation

 If extent of change in two variables is a constant ratio then the


variables are said to have a linear correlation otherwise a non-
linear correlation. E.g
X 5 10 15 20 25
Y 30 60 90 120 150
from the above given data ratio of change in the two series is
same. Any of the data is changed it will become non-linear.
In non-linear correlation consistency of ratio of change does
not exist.
Simple, Partial &Multiple Correlation

 Simple Correlation: Only two variables are involved.

 Multiple Correlation: Three & more variables are involved.


 Partial Correlation: In this also three & more variables are
involved but only two variable influence each other and the
effect of the other is held constant.
e.g: Let X1, X2 & Y are three variables. When we study
relationship between Y & the two variables it is multiple
correlation. But if we study relation between Y & X1 keeping X2
as constant than it is partial correlation.
Methods Of finding correlation
Graph

 If there are two series X & Y


 If they move in the same direction the
Correlation is positive.
 If they move in opposite direction the
Correlation is negative
Scatter Diagram

 It is the simplest way of diagramatic representation of bivariate


data.
 X-> Independent variable & always shown on X-axis.
 Y-> dependent variable & always shown on Y-axis.
 Each pair of (X,Y) are plotted as points(dots) & the diagram
obtained is called Scatter Diagram.
 If the points(dots) plotted are very close to each other than we
have fairly good correlation.
 If the points(dots) plotted are widely scattered to each other
than there is a poor correlation
Scatter Diagram
Algebraic methods of correlation

∑
Karl pearson’s formula for calculation

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