•
The
word correlation is used in everyday life to indicate some form of association. We
can say that we noticed a connection between the day and night. However, in
terms of statistics we use the relationship to indicate the relationship
between the two volume variables. We also assume that the relationship is
linear, with a variable increasing or decreasing a fixed value for a unit that
increases or falls on the other. Other methods often used in these events are
conversion, where the best straight line is estimated to summarize the
relationship.
•
Correlation
is a statistical tool that helps to measure and analyze the degree of relationship
between two variables. „
•
Correlation
analysis deals with the association between two or more
Variables
·
Degree
and type of relationship between two or more quantities (variables) in which
they wary together over a period.
Example:
Variation in the level of expenditure or saving with variation in the level of
income.
·
In terms of the
strength of relationship, the value of the correlation varies
between +1 and -1. A value of ± 1 indicates a perfect degree of
association between the two variables.
·
A+ve
correlation
o
Exists where the
high values of one variables associated with the high values of other variable.
o The correlation is said to be positive correlation if
the values of two variables changing with same direction
§ Ex. Pub. Exp. & sales, Height & weight.
·
A-ve
correlation
o
Means association
of high values of one with low values of the other.
o The correlation is said to be negative correlation
when the values of variables change with
opposite direction
·
Correlation
can vary from +1 to -1
·
Values
close to +1 indicate a high degree of positive correlation.
·
Values
close to -1 indicates a high degree of negative correlation.
·
Values
close to 0 indicates poor correlation of either kind or 0.
·
0 indicates no correlation at all.
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