Correlation

Question

Define the term Correlation and describe Correlation formula in brief.

Answer 1

• Correlation means and interrelationship or correspondence  between two variables.
• Electricity bill and weather
• Height and weight
• Distance and Time
• Demand for the product and Price

Correlation formula:

• The main result of a correlation is called the correlation coefficient (or "r").
• This ranges from -1.0 to +1.0.
• The closer r is to +1 or -1, the more closely the two variables are related.
• If r is close to zero (0), it means there is no relationship between the variables.
• If r is positive, it means that as one variable gets larger the other gets larger.
• If r is negative this means that as one gets larger, the other gets smaller (often called an "inverse" correlation).