CORRELATION
Correlatio
n
A measure of the strength of association among
the between variables
Meaning of correlation:
Correlation is defined as Relationship between two or
more variables. Co – Together ; Relation – Connection
Definition:
“The degree of association between two variables”
“A measure of the strength of association among
and between variables”
Example:
1) Income and standard of living of a person
2) Monsoon and agricultural production at a particular
season
3) Relationship between price and demand
Types of Correlation
Uses of correlation:
Before going to deal with the various methods of correlation, it is
necessary to know the various uses of correlation is statistical analysis
which can be cited as follows:
1) It is used in deriving precisely the degree, and direction
of relationship between variables like price and
demand, advertising expenditure and sales, rainfalls
and crops yield etc.
2) It is used in developing the concept of regression, and
ratio of variation which help in estimating the values of
one variable for a given value of another variable.
3) It is used in reducing the range of uncertainty in the
matter of prediction.
4) It is used in presenting the average relationship
between any two variables through a single value of co-
efficient of correlation.
5) In the field of economics it is used in understanding the
economic behaviour, and locating the important
variables on which the others depend.
6) In the field of business it is used advantageously to
estimate the cost of sales, volume of sales, sales price,
and any other values on the basis of some other
variables which are financially related to each other.
7) In the field of science and philosophy, also, the
methods of correlation are profusely used in making
progressive developments in the respective lines.
8) In the field of nature also, it is used in observing the
multiplicity of the inter-related forces.
