 Are two random variables related to each other ?  What does it mean if the data are independent?  What is meant by the term covariance?  What does.

Slides:



Advertisements
Similar presentations
Covariance and Correlation: Estimator/Sample Statistic: Population Parameter: Covariance and correlation measure linear association between two variables,
Advertisements

6-1 Introduction To Empirical Models 6-1 Introduction To Empirical Models.
Simple Linear Regression and Correlation
A Short Introduction to Curve Fitting and Regression by Brad Morantz
Multiple regression analysis
Linear Regression.
Yard. Doç. Dr. Tarkan Erdik Regression analysis - Week 12 1.
BA 555 Practical Business Analysis
Correlation 2 Computations, and the best fitting line.
Screen guidelines For data entry. Screen Layout for Data Entry Identify screen (name and purpose). Keep number of screens to a minimum. Ensure that all.
Measures of the relationship between 2 variables: Correlation Chapter 16.
Time Series and Forecasting
Forecasting Revenue: An Example of Regression Model Building Setting: Possibly a large set of predictor variables used to predict future quarterly revenues.
1 1 Slide Simple Linear Regression Chapter 14 BA 303 – Spring 2011.
Regression Basics For Business Analysis If you've ever wondered how two or more things relate to each other, or if you've ever had your boss ask you to.
Lecture 15 Basics of Regression Analysis
Introduction to Linear Regression and Correlation Analysis
Correlation Scatter Plots Correlation Coefficients Significance Test.
Copyright © 2008 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved. John W. Creswell Educational Research: Planning,
1 Statistical Analysis - Graphical Techniques Dr. Jerrell T. Stracener, SAE Fellow Leadership in Engineering EMIS 7370/5370 STAT 5340 : PROBABILITY AND.
STATISTICS: BASICS Aswath Damodaran 1. 2 The role of statistics Aswath Damodaran 2  When you are given lots of data, and especially when that data is.
Scatter Plots and Linear Correlation. How do you determine if something causes something else to happen? We want to see if the dependent variable (response.
Forecasting Revenue: An Example of Regression Model Building Setting: Possibly a large set of predictor variables used to predict future quarterly revenues.
Regression Analysis. Scatter plots Regression analysis requires interval and ratio-level data. To see if your data fits the models of regression, it is.
CHAPTER 14 MULTIPLE REGRESSION
Analyzing and Interpreting Quantitative Data
1 Chapter 3 Multiple Linear Regression Multiple Regression Models Suppose that the yield in pounds of conversion in a chemical process depends.
Hedging with Forward & Futures Risk Management Prof. Ali Nejadmalayeri, Dr N a.k.a. “Dr N”
 Graph of a set of data points  Used to evaluate the correlation between two variables.
Linear Regression Model In regression, x = independent (predictor) variable y= dependent (response) variable regression line (prediction line) ŷ = a +
Lecture 8 Simple Linear Regression (cont.). Section Objectives: Statistical model for linear regression Data for simple linear regression Estimation.
Y X 0 X and Y are not perfectly correlated. However, there is on average a positive relationship between Y and X X1X1 X2X2.
Summary of introduced statistical terms and concepts mean Variance & standard deviation covariance & correlation Describes/measures average conditions.
Graph Some basic instructions
Outline Comparison of Excel and R R Coding Example – RStudio Environment – Getting Help – Enter Data – Calculate Mean – Basic Plots – Save a Coding Script.
Introduction to Correlation Analysis. Objectives Correlation Types of Correlation Karl Pearson’s coefficient of correlation Correlation in case of bivariate.
LECTURE 9 Tuesday, 24 FEBRUARY STA291 Fall Administrative 4.2 Measures of Variation (Empirical Rule) 4.4 Measures of Linear Relationship Suggested.
The Object Model. You can think of the contents of an Excel application as a hierarchy of collections of objects, manipulated by code Each object can.
1 Working With Graphs. 2 Graphs In General: A graph is a visual representation of the relationship between two ormore variables. We will deal with just.
Scatter Diagrams scatter plot scatter diagram A scatter plot is a graph that may be used to represent the relationship between two variables. Also referred.
Scatter Diagram of Bivariate Measurement Data. Bivariate Measurement Data Example of Bivariate Measurement:
Statistical Fundamentals: Using Microsoft Excel for Univariate and Bivariate Analysis Alfred P. Rovai Linearity PowerPoint Prepared by Alfred P. Rovai.
CORRELATION ANALYSIS.
Statistical Fundamentals: Using Microsoft Excel for Univariate and Bivariate Analysis Alfred P. Rovai Linearity & Scatterplots PowerPoint Prepared by Alfred.
Social Science Research Design and Statistics, 2/e Alfred P. Rovai, Jason D. Baker, and Michael K. Ponton Evaluating Linearity PowerPoint Prepared by Alfred.
Slide 1 © 2002 McGraw-Hill Australia, PPTs t/a Introductory Mathematics & Statistics for Business 4e by John S. Croucher 1 n Learning Objectives –Understand.
1 Statistical Analysis - Graphical Techniques Dr. Jerrell T. Stracener, SAE Fellow Leadership in Engineering EMIS 7370/5370 STAT 5340 : PROBABILITY AND.
Simple linear regression and correlation Regression analysis is the process of constructing a mathematical model or function that can be used to predict.
Introduction to Eviews Eviews Workshop September 6, :30 p.m.-3:30 p.m.
GOAL: I CAN USE TECHNOLOGY TO COMPUTE AND INTERPRET THE CORRELATION COEFFICIENT OF A LINEAR FIT. (S-ID.8) Data Analysis Correlation Coefficient.
PreCalculus 1-7 Linear Models. Our goal is to create a scatter plot to look for a mathematical correlation to this data.
8 th grade Vocabulary Word, Definition, model Unit 6: Linear Models and Patterns of Association.
Regression Analysis.
*Bring Money for Yearbook!
Regression Analysis AGEC 784.
Appendix B MathScript Basics
Exploring Mathematical Relationships Module 5: Investigation 2
Analyzing and Interpreting Quantitative Data
Spss.
Code is on the Website Outline Comparison of Excel and R
This is where R scripts will load
Chapter 14 Inference for Regression
Eviews Tutorial for Labor Economics Lei Lei
Volume 87, Issue 1, Pages (July 2015)
Regression Forecasting and Model Building
This is where R scripts will load
Introduction to Regression
Correlation and Simple Linear Regression
Correlation and Simple Linear Regression
Presentation transcript:

 Are two random variables related to each other ?  What does it mean if the data are independent?  What is meant by the term covariance?  What does it mean when we say, two variables are correlated?

 Are two random variables related to each other ? y=a*x The exact functional and deterministic form we find in mathematical functions is usually not what we find in observational data.

 Are two random variables related to each other ? y=a*x ? y independent of x ? Whereas mathematical functions give exact relationships between x and y, random noise in the real-world observations affects the processes and measurements. We want to know: Given the data, can we find a statistically significant relationship between x and y and what approximate functional form does it have.

 Are two random variables related to each other ? y=a*x ? y independent of x ? In this case, the small sample size and the large noise would not allow us to distinguish between a linear or non-linear (sqrt) relationship. Unless the scatter plot clearly suggests non-linear relationships, it is reasonable to start testing for linear relationships. In the following we will deal with the problem: How we can detect linear relationships between two random variables; and with what level of confidence?

 R-Studio: close all open files  open class11b.R and immediately go to  menu ”File”  Save As and save a copy class12.R  The source code window in the upper left shows now the file is open under the name class12.R

 Mark lines 1-17 and run this part of the script (CTRL+ENTER or Menu Code -> Run line(s)) First, we run the code lines listed in file scripts/loadano.R: This makes the function loadano() available to us. Then we use this function to read climate data from the files data/USW _tavg_mon_mean_ano.csv data/USW _tavg_mon_mean_ano.csv

 Note that the function loadano() expects a list of parameters on the call:  station expects a string object to identify the station (e.g. “USW ”)  month expects a string object to select from the monthly mean data one specific month from each year.  start and date are used to limit the time range to certain years  This makes the function reusable with different station data  And one can select the month and years to conduct statistical the analysis on a subset of data

This is what R-Studio Environment should show listed Next line with actual code is line 25: This function controls your Plotting window: it divides the plot area into 2x2 panels:

What follows are 4 plot() function calls: Each new plot() function call starts a new subfigure in the 2x2 panel starting at the top left screen, going to the top right, then bottom left, and finally bottom right. Mark only these lines and run the code

What follows are 4 plot() function calls: Each new plot() function call starts a new subfigure in the 2x2 panel starting at the top left screen, going to the top right, then bottom left, and finally bottom right. Mark only these lines and run the code

What follows are 4 plot() function calls: Each new plot() function call starts a new subfigure in the 2x2 panel starting at the top left screen, going to the top right, then bottom left, and finally bottom right. Mark only these lines and run the code

What follows are 4 plot() function calls: Each new plot() function call starts a new subfigure in the 2x2 panel starting at the top left screen, going to the top right, then bottom left, and finally bottom right. Mark only these lines and run the code

 The individual plots in window are rather small  We want to study relationships between two stations for only one selected month not two at the same time.  Use more generic object names  Reduce the burden of manually adjusting the figure’s main title.  Add some more statistical output that measures the covariance and correlation Note: Instructions to do so will be given in the class, the resulting code will be Available online as class12_completed.R