Lesson 7: Correlation

February 14, 2017

Tue, Feb 14

Review:

• Simple Regression
• Sheets and XL Miner Add-On
• Submit Simple Regression assignment (Lesson 6)

Presentation:

• Pearson Correlation Coefficient
  • r = SSxy/√(SSxx*SSyy)
• Correlation does not imply causation
• Spurious Correlations
• Video
• Generate correlation coefficient matrix for multiple variables
  • Use Sheets with XL Miner
  • Demonstrate with sample real estate data

Activity:

• Correlation analysis
  • Use this data set:  East Pueblo RE Sales 2014-2016
  • Find correlations for Bedrooms, Bathrooms, Square Footage, DOM and Selling Price
  • Identify the variable with the strongest correlation to Selling Price (y)
  • Create a scatterplot for the identified variable (x) and Selling Price (y)
    • add trend line and label with equation and R-squared
  • Generate regression output (XL Miner) for the identified variable (x) and Selling Price (y)
    • highlight R-Squared, SSE and SSyy (Residual and Total, respectively) and Coefficients
  • Print results on 1 page to submit
  • Due Thu, Feb 16 in class