Friday 24 February 2017

What is Correlation coefficient?

To understand how to study the relationship between two variables when both are quantitative, one needs a basic understanding of a correlation coefficient.

Correlation is the relationship between two or more paired variables or two or more sets of data. The degree of relationship is measured and represented by the coefficient of correlation.

It is a numerical index that provides information about the strength and direction of the relationship between two variables. It provides information about how two variables are associated.

More specifically, a correlation coefficient is a number that can range from -1 to 1, with zero standing for no correlation at all.

Positive Correlation:

If the number is greater than zero, there is a positive correlation. (A positive correlation is present when scores on two variables tend to move in the same direction).

Negative Correlation:

If the number is less than zero, there is a negative correlation. (A negative correlation is present when scores on two variables tend to move in opposite directions—as one variable goes up, the other tends to go down and vice versa)

No Correlation:

If the number is equal to zero, then there is no correlation between the two variables being correlated.

Perfect Correlation:

If the number is equal to +1 or equal to -1, the correlation is called perfect; that is, it is as strong as possible.

Data analysis for Correlation Research:

Pearson product-moment—when you have two interval or ratio scale variables

Spearman—when variables are at least ordinal

Multiple correlation—relationship between one variable and a set of variables

Canonical correlation—relationship between two sets of variables

Partial correlation—correlation of one variable with another after statistically removing the effects of a third variable

Coefficient of determination—squared correlation—explains the variability in the first variable (proportion of variance accounted for)

Spurious correlation—significant correlation between two variables that is likely due to coincidence, i.e., there is no obvious reason why the two variables should be correlated but they are.