Lesson 2: Pearson Correlation Coefficient

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January 19, 2017 at 10:00 am  •  Posted in s17-busad360 by  •  0 Comments

Thu, Jan 19

Review:

  • Syllabus
  • Least Squares Regression
  • Sum of Squares Calculations

Presentation:

  • Pearson Correlation Coefficient
    • Usually abbreviated as “r”
    • Range of possible values is -1 to +1
    • Negative correlation means as one variable goes up the other goes down
    • Positive correlation means as one variable goes up so does the other
    • Coefficient closer to -1 or +1 indicates stronger correlation
    • Coefficient closer to 0 indicates weaker correlation
    • Use Sum of Squares calculations
      • Pearson Correlation Coefficient = SSxy/(√(SSxx*SSyy))
    • Demonstrate calculation

Activity:

  • Calculate Pearson Correlation Coefficient
    • Use calculations from previous class
      • Data set 1: {(3,5), (5,8), (8,11), (12,10)}
      • Data set 2: {(50,12), (60,15), (70,20), (80,30)}
    • Start from scratch with one other data set
      • Data set 3: {(2,12), (4,9), (7,6), (11,3)}

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