SIMPLE CORRELATION

Introduction
Correlation addresses the relationship between two different factors (variables). The statistic is
called a correlation coefficient. A correlation coefficient can be calculated when there are two
(or more) sets of scores for the same individuals or matched groups.
A correlation coefficient describes direction (positive or negative) and degree (strength) of
relationship between two variables. The higher the correlation coefficient, the stronger the
relationship. The coefficient also is used to obtain a p value indicated whether the degree of
relationship is greater than expected by chance. For correlation, the null hypothesis is that
the correlation coefficient = 0.
Examples: Is there a relationship between family income and scores on the SAT? Does amount
of time spent studying predict exam grade? How does alcohol intake affect reaction time?

DEFINITIONS
Correlation is a statistical measure that indicates the extent to which two or more variables
fluctuate together. A positive correlation indicates the extent to which those variables increase or
decrease in parallel; a negative correlation indicates the extent to which one variable increases as
the other decreases.
importance of Correlation?
Most of the variables show some kind of relationship. For instance, there is relationship
between price and supply, income and expenditure etc. With the help of correlation analysis we
can measure in one figure the degree of relationship.
2. Once we know that two variables are closely related, we can estimate the value of one variable
given the value of another. This is known with the help of regression.
3. Correlation analysis contributes to the understanding of economic behavior, aids in locating
the critically important variables on which others depend.
4. Progressive development in the methods of science and philosophy has been characterized by
increase in the knowledge of relationship. In nature also one finds multiplicity of interrelated
forces.
5. The effect of correlation is to reduce the range of uncertainty. The prediction based on
correlation analysis is likely to be more variable and near to reality.

Correlation
X:

10

15

20

25

30

Y:

10

13

18

17

21

29

Thus, from the above example it is clear that the ratio of change between two variables is not
same. Now, if we plot all these variables on a graph, they would not fall on a straight line.
C. Number of Variables
According to the number of variables, correlation is said to be of the following three types viz;
(i) Simple Correlation.
(ii) Partial Correlation.
(iii) Multiple Correlations.
(i) Simple Correlation:
In simple correlation, we study the relationship between two variables. Of these two variables
one is principal and the other is secondary? For instance', income and expenditure, price_ and
demand etc. Here income and price are principal variables while expenditure and demand are
secondary variables.
(ii) Partial Correlation:
If in a given problem, more than two variables are involved and of these variables we study the
relationship between only two variables keeping the other variables constant, correlation is said
to be partial. It is so because the effect of other variables is assumed" to be constant
(iii) Multiple Correlations:
Under multiple correlations, the relationship between two and more variables is studied jointly.
For instance, relationship between rainfall, use of fertilizer, manure on per hectare productivity
of maize crop.
Correlation & Significance
This lesson expands on the statistical methods for examining the relationship between two
different measurement variables. Remember that overall statistical methods are one of two

types: descriptive methods (that describe attributes of a data set) and inferential methods (that
try to draw conclusions about a population based on sample data).

Correlation

Many relationships between two measurement variables tend to fall close to a straight line. In
other words, the two variables exhibit a linear relationship. The graphs inFigure 6.2 and Figure
6.3 show approximately linear relationships between the two variables.
It is also helpful to have a single number that will measure the strength of the linear relationship
between the two variables. This number is the correlation. The correlation is a single number
that indicates how close the values fall to a straight line. In other words,
the correlation quantifies both the strength and direction of the linear relationship between two
measurement variables. Table 6.1 shows the correlations for data used in Examples 6.1-6.3.
(Note: you would use software to calculate a correlation.)
Table 6.1. Correlations for Examples 6.1-6.3
Example

Variables

Correlation ( r )

Example
6.1

Height and Weight

r = .541

Example
6.2

Distance and
Monthly Rent

r = -.903

Example
6.3

Study Hours and

Exercise Hours

r = .109

Statistical Significance

A statistically significant relationship is one that is large enough to be unlikely to have occurred
in the sample if there's no relationship in the population. The issue of whether a result is unlikely
to happen by chance is an important one in establishing cause-and-effect relationships from
experimental data. If an experiment is well planned, randomization makes the various treatment
groups similar to each other at the beginning of the experiment except for the luck of the draw
that determines who gets into which group. Then, if subjects are treated the same during the
experiment (e.g. via double blinding), there can be two possible explanations for differences
seen: 1) the treatment(s) had an effect or 2) differences are due to the luck of the draw. Thus,

showing that random chance is a poor explanation for a relationship seen in the sample provides
important evidence that the treatment had an effect.
The issue of statistical significance is also applied to observational studies - but in that case there
are many possible explanations for seeing an observed relationship, so a finding of significance
cannot help in establishing a cause-and-effect relationship. For example, an explanatory variable
may be associated with the response because:

Changes in the explanatory variable causes changes in the response;

Changes in the response variable causes changes in the explanatory variable;
Changes in the explanatory variable contribute, along with other variables, to changes in
the response;
A confounding variable or a common cause affects both the explanatory and response
variables;
Both variables have changed together over time or space; or
The association may be the result of coincidence (the only issue on this list that is
addressed by statistical significance).
.

Merits
The following are the chief points of merit that go in favour of the Karl Pearsons method of
correlation:

This method not only indicates the presence, or absence of correlation between any two
variables but also, determines the exact extent, or degree to which they are correlated.
Under this method, we can also ascertain the direction of the correlation i.e. whether the
correlation between the two variables is positive, or negative.
This method enables us in estimating the value of a dependent variable with reference to
a particular value of an independent variable through regression equations.
This method has a lot of algebraic properties for which the calculation of co-efficient of
correlation, and a host of other related factors viz. co-efficient of determination, are made
easy

DEMERITS:

It is comparatively difficult to calculate as its computation involves intricate algebraic

methods of calculations.

It is very much affected by the values of the extreme items.

It is based on a large number of assumptions viz. linear relationship, cause and effect
relationship etc. which may not always hold good.

It is very much likely to be misinterpreted particularly in case of homogeneous data.

In comparison to the other methods, it takes much time to arrive at the results.

It is subject to probable error which its propounder himself admits, and therefore, it is
always advisable to compute it probable error while interpreting its results.
SUMMARY AND CONCLUSION
A simple correlation may be interpreted in a number of different ways: as a measure of linear
relationship, as the slope of the regression line of z-scores, and as the correlation coefficient
squared as the proportion of variance accounted for by knowing one of the variables. All the
above interpretations are correct and in a certain sense mean the same thing.