Correlation
When two sets of data are strongly linked together we say
they have a High Correlation.
The word Correlation is made of Co- (meaning "together"), and Relation
- Correlation is Positive when the values increase together, and
- Correlation is Negative when one value decreases as the other increases
Like this:
Correlation can have a value:
- 1 is a perfect positive correlation
- 0 is no correlation (the values don't seem linked at all)
- -1 is a perfect negative correlation
The value shows how good the correlation is (not how steep the line is), and if it
is positive or negative.
Example: Ice Cream Sales
The local ice cream shop keeps track of how much ice cream
they sell versus the temperature on that day, here are their figures for the
last 12 days:
Ice
Cream Sales vs Temperature
|
|
Temperature
°C
|
Ice
Cream Sales
|
14.2°
|
$215
|
16.4°
|
$325
|
11.9°
|
$185
|
15.2°
|
$332
|
18.5°
|
$406
|
22.1°
|
$522
|
19.4°
|
$412
|
25.1°
|
$614
|
23.4°
|
$544
|
18.1°
|
$421
|
22.6°
|
$445
|
17.2°
|
$408
|
You can easily see that warmer weather leads to more sales,
the relationship is good but not perfect.
In fact the correlation is 0.9575 ... see at the end.
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