The Correlation Coefficient
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1 The Correlation Coefficient Lelys Bravo de Guenni April 22nd, 2015
2 Outline The Correlation coefficient Positive Correlation Negative Correlation Properties of the Correlation Coefficient Non-linear association Outliers effect on the correlation
3 The Correlation coefficient Positive Correlation Suppose that the following scatter diagram corresponds to the standard units of the data. The signs of the quadrants are determined by the sign of the products. There are more points in the positive quadrants than in the negative quadrants. So the average is positive yielding a positive correlation. April 22nd, 2015 UCSC AMS5 3/19
4 April 22nd, 2015 UCSC AMS5 4/19
5 Negative Correlation In this case there are more points in the negative quadrants than in the positive quadrants. So the average is negative, yielding a negative correlation. April 22nd, 2015 UCSC AMS5 5/19
6 Properties of the Correlation Coefficient Suppose you measure the correlation between the temperature in New York and that in Boston during a month. Do you expect to get the same correlation if you measure it in Celsius than if you measure it in Fahrenheit? Recall the process of obtaining the correlation. The first step is to convert the samples of both variables to standard units. This implies that the correlation does not depend on units. Thus, no matter if you use Celsius of Fahrenheit, you will get the same correlation. On the other hand, since the correlation depends on the product of the two variables, it does not matter whether you consider the correlation the temperature in NY and that in Boston or the correlation between the temperature in Boston and that in NY. April 22nd, 2015 UCSC AMS5 6/19
7 The correlation is not affected when the two variables are interchanged. The correlation is not changed if the same number is added to all the values of one of the variables. The correlation is not changed if all the values of one of the variables is multiplied by the same positive number. It will change sign if the number is negative. April 22nd, 2015 UCSC AMS5 7/19
8 Non-linear association Correlation is useful only when measuring the degree of linear association between two variables. That is, how much the values from two variables cluster around a straight line. April 22nd, 2015 UCSC AMS5 8/19
9 The variables in this plot have an obvious non-linear association. Nevertheless the correlation between them is 0.3. This is because the points are clustered around a curve that has the shape of a parabola and not a straight line. April 22nd, 2015 UCSC AMS5 9/19
10 Outliers effect on the correlation Similarly, the presence of outliers produces an artificially low correlation between variables that have a high degree of linear association. April 22nd, 2015 UCSC AMS5 10/19
11 The correlation of the data in the plot is When the points marked with crosses in red are considered, the correlation drops to April 22nd, 2015 UCSC AMS5 11/19
12 Find the correlation coefficient for each of the following data sets: Example 1: x y The average of x is 2, the SD is 1. The average of y is 3 and the SD is 2. Then, the standardized values are April 22nd, 2015 UCSC AMS5 12/19
13 x y x y and the average of the last column is April 22nd, 2015 UCSC AMS5 13/19
14 Example 2: x y x has not changes, y has average equal to 2 and a SD equal to 1. Then, the standardized values are April 22nd, 2015 UCSC AMS5 14/19
15 x y x y and the average of the last row is 0.3. April 22nd, 2015 UCSC AMS5 15/19
16 Example 3 x y We observe that y = 2 x and so there is total linear association between x and y, implying that the correlation is 1. April 22nd, 2015 UCSC AMS5 16/19
17 Problem: Guess the correlation coefficients in these scatter diagrams April 22nd, 2015 UCSC AMS5 17/19
18 Answers: a) +1.00; b) -0.50; c) +0.85; d) April 22nd, 2015 UCSC AMS5 18/19
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