1. Covariance/ Correlation
A measure of the nature of the association between two variables
Describes a potential linear relationship
Positive relationship
Large values of X result in large values of Y
Negative relationship
Large values of X result in small values of Y
“Manual” calculations are based on the joint probability distributions
See examples in Chapter 4 (pp )
JMB Chapter 4 Lecture 2 9th ed
EGR 252 Fall 2016

2. Calculating Correlation Using Sample Data
Statistical software is often used to calculate the sample correlation coefficient (r)
Exercise – data on page 435
Math grade
English grade 70 74 92 84 80 63 87 65 78 83 90
Data Analysis - correlation
Math grade
English grade 1
0.2396
JMB Chapter 4 Lecture 2 9th ed
EGR 252 Fall 2016

3. Calculating Correlation Using Sample Data
Exercise on page 435 continued
Data Analysis - regression
Regression Statistics
Multiple R
ANOVA df SS MS F
Significance F
Regression 1
Residual 4
Total 5
JMB Chapter 4 Lecture 2 9th ed
EGR 252 Fall 2016

4. Calculating Correlation Using Sample Data
It is important to graph data BEFORE conducting linear regression in Excel.
The graphs suggest that linear regression is not a good model.
Regression Statistics
Multiple R
The R value further supports the concept that Math Grades and English grades are not correlated.
JMB Chapter 4 Lecture 2 9th ed
EGR 252 Fall 2016