Question: Repeat Problem, but now make the second input variable triangularly distributed with parameters 50, 100, and 500. This time, verify not only that the correlation between the two inputs is approximately 0.7, but also that the shapes of the two input distributions are approximately what they should be: normal for the first and triangular for the second. Do this by creating histograms in Excel. The point is that you can use @RISK's RISKCORRMAT function to correlate random numbers from different distributions.
Problem: When you use @RISK's correlation feature to generate correlated random numbers, how can you verify that they are correlated? Try the following. Use the RISKCORRMAT function to generate two normally distributed random numbers, each with mean 100 and standard deviation 10, and with correlation 0.7. To run a simulation, you need an output variable, so sum these two numbers and designate the sum as an output variable. Now run @RISK with 500 iterations. Click on @RISK's Excel Reports button and check the Simulation Data option to see the actual simulated data.
a. Use Excel's CORREL function to calculate the correlation between the two input variables. It should be close to 0.7. Then create a scatterplot of these two input variables. The plot should indicate a definite positive relationship.
b. Are the two input variables correlated with the output? Use Excel's CORREL function to find out. Interpret your results intuitively.