Lecture SLR (1)
Lecture SLR (1)
• A businessperson may want to know whether the volume of sales for a given month
is related to the amount of advertising the firm does that month.
• Educators are interested in determining whether the number of hours a student
studies is related to the student’s score on a particular exam.
• Medical researchers are interested in questions such as “Is caffeine related to heart
damage?” or “Is there a relationship between a person’s age and his or her blood
pressure?”
• A zoologist may want to know whether the birth weight of a certain animal is related
to its life span.
Introduction (Contd.)
These are only a few of the many questions that can be answered by
using the techniques of correlation and regression analysis.
• Correlation is a statistical method used to determine whether a
relationship between variables exists.
Introduction
• In simple correlation and regression studies, the researcher collects data
on two numerical or quantitative variables to see whether a relationship
exists between the variables. For example:
Introduction
• The independent variable is the variable in regression that can be controlled or manipulated.
• The dependent variable is the variable in regression that cannot be controlled or manipulated.
Introduction
Scatter Plot
Correlation
Formula for Correlation Coefficient
Correlation
Example # 03
• Compute the value of the correlation coefficient for the data obtained
in the study of age and blood pressure:
Correlation
Example # 04
• Compute the value of the correlation coefficient for the data obtained
in the study of the number of absences and the final grade of the
seven students in the statistics class:
Correlation
The Significance of Correlation
• Since the value of r is computed from data obtained from samples,
there are two possibilities when r is not equal to zero: either the value
of r is high enough to conclude that there is a significant linear
relationship between the variables, or the value of r is due to chance.
Correlation
Hypothesis testing for Correlation
Correlation
Example # 05
• Test the significance of the correlation coefficient found in Example #
01.
Correlation
Example # 05 (Contd.)
Correlation
Possible relationship b/w variables
When the null hypothesis has been rejected for a specific value, any of the following
possibilities can exist.
ii. There is a reverse cause-and-effect relationship between the variables. That is, y
causes x. For example, suppose a researcher believes excessive coffee consumption
causes nervousness, but the researcher fails to consider that the reverse situation
may occur. That is, it may be that an extremely nervous person craves coffee to calm
his or her nerves.
iii. The relationship between the variables may be caused by a third variable.
Remember, correlation does not necessarily imply causation. Correlation
Curvilinear relationship
Do the following for next 3 slides
Practice Questions for Correlation
Correlation
Practice Questions for correlation (Contd.)
Correlation
Simple Linear Regression
• In studying relationships between two variables:
• The presence of this random error, , keeps the model from becoming
simply a deterministic equation.
Simple Linear Regression
• We must keep in mind that:
• in practice ß0 and ß1 are not known and must be estimated from data.
• we never observe the actual ϵ values in practice and thus we can never draw
the true regression line
• The residual sum of squares is often called the sum of squares of the errors
about the regression line and is denoted by SSE.
The sign of the correlation coefficient and the sign of the slope of the regression line will
always be the same. The reason is that the numerators of the formulas are the same.
• For any specific value of the independent variable x, the value of the
dependent variable y must be normally distributed about the
regression line.