Statistics: Correlation

Topics in this chapter

• Types and Direction of Correlation
• Scatter Diagrams and Relationships
• Pearson Correlation Calculation
• Correlation Coefficient Interpretation
• Spearman Rank Correlation
• Correlation Limitations and Causation

Cheat sheet

Practice questions

1. Question 1Q-4CF6E9

   If the coefficient of correlation between two variables is -1, what does it indicate?

   1. A.Perfect positive correlation
   2. B.Perfect negative correlation
   3. C.Absence of correlation
   4. D.Weak positive correlation
   See the answer and solution
2. Question 2Q-A66B1A

   A correlation coefficient of -0.75 between the price of a product and its quantity demanded suggests that the two variables have:

   1. A.A strong inverse linear relationship
   2. B.A perfect direct relationship
   3. C.No relationship at all
   4. D.A weak direct relationship
   See the answer and solution
3. Question 3Q-1C24D0

   Explain why correlation between two variables does not necessarily prove that one variable causes the other.

   See the answer and solution
4. Question 4Q-450487

   The correlation coefficient between hours of exercise per week and physical fitness score is +0.92. What is the best interpretation?

   1. A.There is a strong positive linear relationship between the variables.
   2. B.There is a strong negative linear relationship between the variables.
   3. C.There is no relationship between the variables.
   4. D.The variables must have identical values.
   See the answer and solution
5. Question 5Q-C50D4B

   For five pairs of observations, the ranks of X are 1, 2, 3, 4, 5 and the corresponding ranks of Y are 2, 1, 3, 5, 4. Using Spearman's rank correlation formula, what is the coefficient of rank correlation?

   1. A.0.20
   2. B.0.60
   3. C.0.80
   4. D.1.00
   See the answer and solution