Concept: Co-efficient of Correlation (r):
In simple linear regression analysis, the co-efficient of correlation is a statistic which indicates an association between the independent variable and the dependent variable.
The co-efficient of correlationis represented by "
r " and its value lies between
−1.00 and
+1.00.
- When the co-efficient of correlation is positive, such as
+0.80, it means the dependent variable is increasing\/decreasing when the independent variable is increasing/decreasing.
A negative value indicates an inverse association; the dependent variable is increasing/decreasing when the independent variable is decreasing\/increasing.
- A co-efficient of correlation of
+0.8 or
−0.8 indicates a strong correlation between theindependent variable and the dependent variable. An
r of
+0.20 or
−0.20 indicates a weak correlation between the variables. When the co-efficient of correlation is
0.00, there is no correlation.
r=‌| Σ(xi−x)(yi−y) |
| √∑(xi−x)2‌∑(yiy)2 |
Calculation: From the properties/nature of the co-efficient of correlation, we know that the correlation coefficient is independent of the choice of origin and scale.