StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Concept of correlation - Essay Example

Cite this document
Summary
As per definition, a correlation coefficient must lie between -1 and +1. If the correlation between two variables is high, than the model fits the data well depending…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.9% of users find it useful
Concept of correlation
Read Text Preview

Extract of sample "Concept of correlation"

Correlation Analysis Correlation analysis is done to measure the strength or magnitude of linear association between two variables. As per definition, a correlation coefficient must lie between -1 and +1. If the correlation between two variables is high, than the model fits the data well depending on whether it is positively or negatively correlated. While, if the correlation is low, than the model is not providing a good fit to the data.We can explain correlation with the help of graphs Figure 1: Perfectly Positive CorrelationThe graph above shows that the variables are perfectly positively correlated as an increase in the value of independent variable causes the value of dependent variable to increase by the slope of the equation.

An example of a perfectly positive correlation can be supply of good with respect to the price of good. As the price increase, the suppliers tend to supply more of the product. Figure 2: Perfectly Negative CorrelationThis graph above shows that the variables are perfectly negatively correlated as an increase in the value of the independent variable causes the value of dependent variable to decrease by the slope of the equation. An example of a perfectly negative correlation can be the demand of good with respect to the price of good.

As the price increase, the consumers tend to less of the product. Figure 3: Minimal CorrelationThe third case where the correlation is positive but close to zero since the variables are not closely associated and the data are not scattered around a positive line. The correlation between two variables is weak if they are close to zero whether they are negative or positive. GDP and interest rates of the economy are correlated but the magnitude of correlation is very low. On the other side, there might be a strong correlation between smoking and lung cancer.

In the article published by Goolsbee and Guryan (2005) we can infer the correlations among the several variables. The table below illustrates how these variables are related:Variable A Variable BPositive, Negative, Minimal Correlation:Number of school luncheligible students in theschoolAmount of fundingreceived by the school forfederal and stateeducation-relatedprogramsPositive CorrelationImpact of subsidy receivedAge of students at schoolMinimal CorrelationNumber of classroomsconnected to the InternetStudent performance, asmeasured by standardizedtest scoresMinimal CorrelationTeachers’ comfort levelwith the InternetAbility of teachers to useInternet effectively withtheir studentsPositively Correlated1) As per the government policy, the federal government subsidizes or gives free school lunches to students whose family income is below a certain level, usually close to the poverty level.

So higher the number of eligible students for lunch, higher will be the amount of funding received by the school2) Age is not correlated with the impact of subsidy received3) As mentioned in the case study that increase in classroom Internet connections did not prove to have a profound impact on student achievement, as measured by test scores in a variety of subjects.4) The authors pointed that if teachers are uncomfortable working with the technology they cannot use internet effectively with their students.

WidgeCorp can use this correlation analysis to effectively market its cold drinks in public schools. Since we know that there is a positive correlation between free school lunches and poverty level therefore WidgeCorp can approach the government to offer quality foods at affordable rates. There will be a stiff competition on the basis of price therefore as a case of bulk discounting WidgeCorp should offer quality foods to Government on competitive prices. ReferencesGoolsbee , A. & Guryan, J. (2005).

The Impact of Internet Subsidies in Public School. Avaialable from site: http:// faculty.chicagobooth.edu/austan.goolsbee/research/erate.pdf

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Concept of correlation Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1572352-concept-of-correlation
(Concept of Correlation Essay Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/miscellaneous/1572352-concept-of-correlation.
“Concept of Correlation Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1572352-concept-of-correlation.
  • Cited: 0 times

CHECK THESE SAMPLES OF Concept of correlation

Eysenck Personality Questionnaire and Time Perception

The paper "Eysenck Personality Questionnaire and Time Perception" affirms that the experiment confirmed that there is a negative correlation between extraversion and time estimation.... hellip; The primary aim of the experiment was to determine the nature of the correlation between extraversion and time estimation.... The primary aim of this experiment was to determine the correlation between extraversion and time estimation....
6 Pages (1500 words) Essay

What is the Correlation Method

Some common types of correlation methods include: tests and surveys; observation; and case studies.... The correlation method is a scientific method of psychological research.... The correlation method is time-efficient as well as cost-efficient and helps define relationships.... hellip; The correlation method is used to measure the relationship between two variables. This method is a way of explanation by correlations.... correlation methods tell which two variables are related, but cannot tell which causes the influence....
3 Pages (750 words) Essay

Investment Strategy

An investment strategy for an inherited amount of £ 100,000 suggested by a financial advisor seeks a balanced portfolio of investments consisting of building and bank deposits, individual saving accounts (ISAs), unit and/ or investment trusts, gilts, ordinary shares, and premium bonds.... … The long term objectives of an investor differ from person to person....
8 Pages (2000 words) Research Paper

Opportunity Costs, Cost of Capital, The Firms Optimum Capital Structure

The concept of correlation explains that the movement of two assets in a portfolio should not be in tandem so that if one falls the other is still giving you profits and the efficient frontier explains that the investments must be based on risk-averse investments that is having to get more return for a particular level of risk.... The three points are Diversification, correlation and Efficient frontier....
4 Pages (1000 words) Assignment

Correlation between the concepts of rights and law

This paper seeks to critically analyze the relationship between rights and law.... It starts by defining these two concepts in order to get a full understanding of their meanings.... The main part of the paper discusses the theoretical framework underpinning these two concepts.... hellip; According to the Declaration of Independence of the United States (1776), human beings are born with inalienable rights and these should not be violated....
19 Pages (4750 words) Essay

The Number of Siblings and their Position in the Family

nbsp;… The concept of correlation between the birth order and personality development have been first explored in detail by Alder for analyzing the psychological situation of each birth order position.... The author of this term paper "The Number of Siblings and their Position in the Family" explains that discussion and exploration of the personality development influenced by the birth order have been an ancient event....
6 Pages (1500 words) Term Paper

Correlational Study (EPQ & Time Perception)

This paper “Correlational Study (EPQ & Time Perception)” is the experiment confirmed that there is a negative correlation between extraversion and time estimation.... The primary aim of this experiment was to determine the correlation between extraversion and time estimation.... H1 of the experiment was that there is a negative correlation between extraversion and time estimation....
6 Pages (1500 words) Essay

Humanitarian Intervention Exception and Respect for National Sovereignty

This report "Humanitarian Intervention Exception and Respect for National Sovereignty" discusses the disagreements about humanitarian intervention have sound and credible theoretical bases.... Examinations of the theories establish the likelihood of reconciliation of humanitarian intervention.... hellip; Humanitarian intervention must be allowed to safeguard human rights only in instances where severe violations of individual rights prevail over the other moral aspects encompassed by the moral unwritten rule obliging regard for national sovereignty....
11 Pages (2750 words) Report
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us