Correlation and Regression

CORRELATION is an important statistical concept which refers to association or interrelationship among variables.

The reasons of studying correlation is for one to be capable to establish a relationship, plan and control the inputs as independent variables and the output as dependent variables

In business one may be interested to establish whether there exists a relationship among the

i. Amount of fertilizer applied on a described farm and the resulting harvest

ii. Amount of experience one has and the corresponding performance/presentation

iii. Amount of money spent on advertisement and the expected incomes after sale of the goods or service

There are two methods which measure the degree of correlation among two variables these are denoted by R and r.