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Usefulness of Correlation
1.Correlation is very useful to economists to study the relationship between variables like price and quantity demanded. To businessmen it helps to estimate costs sales price and other related variables.
2.Some variables show some kind of relationship, correlation analysis helps in measuring the degree of relationship between the variables like supply and demand price an supply income and expenditure etc.
3.The relation between variables can be verified and tested fro significance with the help of the correlation analysis. The effect of correlation is to reduce the range of uncertainty of our prediction.
4. The coefficient of correlation is a relative measure and we can compare the relationship between variables which are expressed in different units.
5.Sampling error can also be calculated.
6. Correlation is the basis for the concept of regression and ratio of variation.
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