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Business Statistics Autumn Term > Correlation > Flashcards

Correlation Flashcards

1
Q

What does correlation allow us to investigate?

A

The extent (strength and direction of relationship) to which 2 numerical variables are related to each other.

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2
Q

What diagram is used to describe a linear relationship?

A

Scatter diagram

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3
Q

What does a scatter diagram provide?

A

A visual representation of the relationship between two quantitative variables

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4
Q

What is the direction in a scatter diagram indicated by?

A

A positive or negative slope

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5
Q

What does the strength of the relationship between two variables on a scatter diagram depend on?

A

How closely the data points are scattered about a straight line

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6
Q

What does a positive correlation mean?

A

As the x value increases so does the y value

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7
Q

What does a negative correlation mean?

A

As the x value increases the y value decreases

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8
Q

What is the correlation coefficient (r)?

A

A numerical measure of the strength and direction of the linear relationship between two quantitative variables.

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9
Q

When calculating correlation coefficient what values do you need to find out?

A

You need to find Sxy, Sxx and Syy

  • xy
  • x2 (xx)
  • y2 (yy)
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10
Q

What indicates the direction of the linear relationship when the correlation coefficient has been calculated?

A

The sign of r

Positive or negative

Has to be between 1 and -1

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11
Q

What indicates the strengh of the relationship when the correlation coefficient has been calculated?

A

The magnitude of r

If r is close to zero the linear relationship is very week

The strength of the association increases as r moves away from zero, approaching -1 or 1

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12
Q

Why does the correlation coefficient not have any units of measurement?

A

Its value is independent of the scale of each variable

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13
Q

What are the limitations of using correlation coefficient?

A
  • The values of r can be adversley affected by extreme values
  • Can only be used for quantitative variables
  • Only describes the strength and direction of linear relationships
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14
Q

What does the rank correlation coefficient show?

A

The linear relationship between two sets of ranked data

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15
Q

What does rs mean?

A

Spearmans rank correlation coefficient

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16
Q

What is the equation of the rank correlation coefficient?

A
17
Q

What does n and d mean in the rank correlation coefficient formula?

A

n = the number of pairs of data values

d = the difference in ranks for each pair

18
Q

What does it mean if rs is positive?

A

The ranks are positivley correlated

When one variable is ranked highly so is the other variable

19
Q

What does it mean if rs is negative?

A

Higher rankings in one variable are measured against lower rankings in the other

Business Statistics Autumn Term (8 decks)

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