Positive and Negative Correlation

What is correlation?

• Correlation looks at the strength of a relationship between two variables

Correlation Variables:

• Independent Variable: The factor that causes the dependent variable to change

• Dependant Variable: The variables that are influenced by the independent variable

Explaining the scatter chart:

• Correlation is usually measured by using a scatter diagram, on which data points are plotted

• The dependent variable is normally plotted on the y-axis: and the independent variable is on the x-axis

• A ‘line of best fit’ (the regression line) attempts to plot the mathematical relationship between the variables based on the data points

Types of correlation:

• Positive correlation: A positive relationship exists whereas the independent variable increases in values, so does the dependent variable

• Negative correlation: A negative relationship exists whereas the independent variable increases in value, the dependent variable falls in value

• No correlation: There is no discernible relationship between the independent and dependent variable

Strong or Weak Correlation?

• The line of best fit indicates the strength of the correlation

• A strong correlation means that there is little room between the data points and the line of best fit

• Weak correlation means that the data points are spread quite wide and far from the line of best fit

• If the data suggest a strong correlation, then the relationship might be used to make marketing predictions