What is Correlation? | Types of Correlation | Correlation Coefficient

What is Correlation?


Hello everyone welcome to the Pexario blogger site in this session. We will discuss a very widely used term in statistics that is correlation and we will see what is the significance of correlation and where it is used? So let's discuss the agenda for today's session we'll start this tutorial by understanding what is correlation then we want to discuss the two types of correlation and correlation coefficient after that we will see the limitations of correlation and some real-life applications of correlation. So let's get started

What is correlation?

Correlation refers to a statistical relationship between two entities it measures the extent to which the two variables are linearly related for example the price and demand of a product are in correlation they have linearly related the value of correlation is always lies between minus one to plus one there are mainly two types of correlation 

Positive Correlation :

The first one is a positive correlation. A positive correlation means that the linear relationship is positive and the two variables increase or decrease in the same direction the number of trees cut down and the probability of erosion is in correlation when one increases other also increases and vice versa.

Negative correlation :

A negative correlation is just the opposite the relationship line has a negative slope and the variables change in opposing directions for example if you decrease the speed of the car the time taken to reach the destination increases this is the negative correlation.

Correlation coefficient :

The correlation coefficient which is denoted by r gives us a measure of the strength of the linear relationship between the two variables the value is denoted by the letter r and it ranges from minus 1 to plus 1. if it is less than 0 it implies that there is a negative correlation the minus 1 indicates there is a strong negative correlation between the variables. If r is greater than 0 it implies there is a positive correlation plus 1 is the strongest point of a positive correlation when r is equal to 0 we can say that there is no correlation between the variables.

Limitations of Correlation :

There are also some limitations to correlation

  • The first one is correlation does not give you every insight on the data mean and standard deviation are still the important parameters to get insight into a data
  • The second one is the data will not produce a straight line every time and it will be difficult to predict the value of r just with the straight line or the slope of the graph.

Real-life Application :

Now let's see some real-life applications of correlation if you take any e-commerce company whose website is accessed by millions of users all over the world the company can look at all the data and they can measure how much time was spent by the customer and the respective money spent by the customer we can also predict the unique users that visited the website and how it affected the sales in a day. The third application can be the patient blood pressure and the medication used the level of the patient blood pressure and the effect of medication on it can be correlated.

So with this, we come to the end of this tutorial thank you all for reading this session. we hope you enjoyed it if you have any questions feel free to put them in the comments section of this blog thank you again and happy learning.

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