Correlation is a statistical measure that describes the degree to which two variables move in relation to each other. It helps us understand whether increases or decreases in one variable are associated with increases or decreases in another variable.

Types of Correlation:

I.Positive Correlation: Occurs when both variables increase or decrease together.

Example: The more hours a student spends studying, the higher their test scores tend to be.

This means the variables move in the same direction.

II.Negative Correlation: Occurs when one variable increases while the other decreases.

Example: As the number of hours of exercise increases, body weight may decrease.

Here, the variables move in opposite directions.

III.No Correlation: Occurs when there is no clear or consistent relationship between two variables.

Example: Shoe size and intelligence show no meaningful relationship.

Strength of Correlation:

The strength of correlation is usually measured by a correlation coefficient (r), which ranges from -1 to +1.
+1 → Perfect positive correlation.
-1 → Perfect negative correlation.
0 → No correlation.
The closer the value is to ±1, the stronger the relationship.

Important Note: Correlation ≠ Causation

Just because two variables move together does not mean one causes the other.

Example: Ice cream sales and drowning incidents both increase in summer. They are correlated, but one does not cause the other. The true factor is hot weather (a third variable).

This is a critical point in research and analysis; misinterpreting correlation as causation can lead to false conclusions.

Exercise

Look at the scenarios below and determine the type of correlation:

The higher the price of a product, the lower the quantity sold.
The more a store spends on digital marketing, the more online orders they receive.
The number of umbrellas sold compared to the number of movies released in a year.

Answers

Negative correlation → Higher price = fewer sales.
Positive correlation → More marketing spend = more orders.
No correlation → Umbrella sales and movie releases are unrelated.

Reflection Question: Think of a situation where identifying a trend helped you in decision-making?

M5:S3 - Introduction To Correlation

PREVIOUS STEP

Identifying Patterns and Trends

NEXT STEP