Correlation

The relationship between two variables such that the change in one variable results in a positive or negative change in the other variable and also a greater change in one variable results in corresponding greater or smaller change in the other variable is known as correlation.

Coefficient of correlation 

It is a measure of a tendency that is the degree to which two variables are interrelated is measured by coefficient which is called the coefficient of correlation. It is denoted by ‘r’. 

Types of correlation

• Positive correlation 

When direct relationship between two variables. Example height and weight of an individual 

• Negative correlation 

Inverse relationship between two variables. Example Price and Demand of a commodity.

• Linear correlation 

When the plotted (x, y) are approximately on or near about a straight line. Example savings and earnings of a person.

• Perfect correlation 

If the deviation in one variable is followed by a corresponding and proportional deviation then the correlation is said to be perfect correlation. 

Pearson Correlation Coefficient Formula: