Correlation analysis, Applied Statistics

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Correlation Analysis

Correlation Analysis is performed to measure the degree of association between two variables. The measure is called coefficient of correlation. The coefficient of correlation is also said to be a measure of covariance between two series. Of the several mathematical methods of measuring correlation, the Karl Pearson's method, popularly known as Pearson's coefficient of correlation is most widely used in practice.

 while the Statistic r is given by r =   

2225_correlation analysis.png

A simple formula is

r

= 733_correlation analysis1.png
1076_correlation analysis2.png

The correlation coefficient describes not only the magnitude of the correlation but also its direction.


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