Hypothesis - a proposition, or set of propositions, set forth as an explanation for the occurrence of some specified group of phenomena, either

asserted merely as a provisional conjecture to guide investigation (working hypothesis) or accepted as highly probable in the light of established facts.
Statistical hypothesis test is a method of making decisions using data, whether from a controlled experiment or an observational study (not controlled). In statistics, a result is called statistically significant if it is unlikely to have occurred by chance alone, according to a pre-determined threshold probability, the significance level. The phrase "test of significance" was coined by Ronald Fisher: "Critical tests of this kind may be called tests of significance, and when such tests are available we may discover whether a second sample is or is not significantly different from the first.

A type I error, also known as a false positive, occurs when a statistical test rejects a true null hypothesis (H0). For example, if a null hypothesis states a patient is healthy, and the patient is indeed healthy, but the test rejects this hypothesis, falsely suggesting that the patient is sick. The rate of the type I error is denoted by the Greek letter alpha ( ) and usually equals the significance level (or size) of a test. A type II error, also known as a false negative, occurs when the test fails to reject a false null hypothesis. For example, if a null hypothesis states a patient is healthy, and the patient is in fact sick, but the test fails to reject the hypothesis, falsely suggesting that the patient is healthy. The rate of the type II error is denoted by the Greek letter beta ( ) and related to the power of a test (which equals 1- ). The desired (i.e., non-erroneous) outcomes of the test are called true positive meaning "rejecting null hypothesis, when it is false" and true negative meaning "not rejecting null hypothesis, when it is true". A statistical test can either reject (prove false) or fail to reject (fail to prove false) a null hypothesis, but never prove it true (i.e., failing to reject a null hypothesis does not prove it true). In colloquial usage type I error can be thought of as "convicting an innocent person" and type II error "letting a guilty person go free".
Steps in Hypothesis Testing (1 of 5) The basic logic of hypothesis testing has been presented somewhat informally in the sections on "Ruling out chance as an explanation" and the "Null hypothesis." In this section the logic will be presented in more detail and more formally. 1. The first step in hypothesis testing is to specify the null hypothesis (H0) and the alternative hypothesis (H1). If the research concerns whether one method of presenting pictorial stimuli leads to better recognition than another, the null hypothesis would most likely be that there is no difference between methods (H0: 1 - 2 = 0). The alternative hypothesis would be H1: 1 2. If the research concerned the correlation between grades and SAT scores, the null hypothesis would most likely be that there is no correlation (H0: = 0). The alternative hypothesis would be H1: 0. The next step is to select a significance level. Typically the 0.05 or the 0.01 level is used.

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The third step is to calculate a statistic analogous to the parameter specified by the null hypothesis. If the null hypothesis were defined by the parameter 1- 2, then the statistic M1 - M2 would be computed.

The fourth step is to calculate the probability value (often called the p value). The p value is the probability of obtaining a statistic as different or more different from the parameter specified in the null hypothesis as the statistic computed from the data. The calculations are made assuming that the null hypothesis is true. (click here for a concrete example) 4. The probability value computed in Step 4 is compared with the significance level chosen in Step 2. If the probability is less than or equal to the significance level, then the null hypothesis is rejected; if the probability is greater than the significance level then the null hypothesis is not rejected. When the null hypothesis is rejected, the outcome is said to be "statistically significant" when the null hypothesis is not rejected then the outcome is said be "not statistically significant." 5. If the outcome is statistically significant, then the null hypothesis is rejected in favor of the alternative hypothesis. If the rejected null hypothesis were that 1- 2 = 0, then the alternative hypothesis would be that 1 2. If M1 were greater than M2 then the researcher would naturally conclude that 1 2. (Click here to see why you can conclude more than 1 2)
Significance Level In hypothesis testing, the significance level is the criterion used for rejecting the null hypothesis. The significance level is used in hypothesis testing as follows: First, the difference between the results of the experiment and the null hypothesis is determined. Then, assuming the null hypothesis is true, the probability of a difference that large or larger is computed . Finally, this probability is compared to the significance level. If the probability is less than or equal to the significance level, then the null hypothesis is rejected and the outcome is said to be statistically significant. Traditionally, experimenters have used either the 0.05 level (sometimes called the 5% level) or the 0.01 level (1% level), although the choice of levels is largely subjective. The lower the significance level, the more the data must diverge from the null hypothesis to be significant. Therefore, the 0.01 level is more conservative than the 0.05 level. The Greek letter alpha ( ) is sometimes used to indicate the significance level. See also: Type I error and significance test

What Does Z-Test Mean? A statistical test used to determine whether two population means are different when the variances are known and the sample size is large. The test statistic is assumed to have a normal distribution and nuisance parameters such as standard deviation should be known in order for an accurate z-test to be performed.
Description The t-test (or student's t-test) gives an indication of the separateness of two sets of measurements, and is thus used to check whether two sets of measures are essentially different (and usually that an experimental effect has been demonstrated). The typical way of doing this is with the null hypothesis that means of the two sets of measures are equal.

In statistics, the number of degrees of freedom is the number of values in the final calculation of a statistic that are free to vary.[1] Estimates of statistical parameters can be based upon different amounts of information or data. The number of independent pieces of information that go into the estimate of a parameter is called the degrees of freedom (df). In general, the degrees of freedom of an estimate of a parameter is equal to the number of independent scores that go into the estimate minus the number of parameters used as intermediate steps in the estimation of the parameter itself (which, in sample variance, is one, since the sample mean is the only intermediate step).[2] Mathematically, degrees of freedom is the dimension of the domain of a random vector, or essentially the number of 'free' components: how many components need to be known before the vector is fully determined. The term is most often used in the context of linear models (linear regression, analysis of variance), where certain random vectors are constrained to lie in linear subspaces, and the number of degrees of freedom is the dimension of the subspace. The degrees-of-freedom are also commonly associated with the squared lengths (or "Sum of Squares") of such vectors, and the parameters of chi-squared and other distributions that arise in associated statistical testing problems. While introductory texts may introduce degrees of freedom as distribution parameters or through hypothesis testing, it is the underlying geometry that defines degrees of freedom, and is critical to a proper understanding of the concept. Walker (1940)[3] has stated this succinctly: For the person who is unfamiliar with N-dimensional geometry or who knows the contributions to modern sampling theory only from secondhand sources such as textbooks, this concept often seems almost mystical, with no practical meaning.
A chi-squared test, also chi-square test or 2 test, is any statistical hypothesis test in which the sampling distribution of the test statistic is a chi-squared distribution when the null hypothesis is true, or any in which this is asymptotically true, meaning that the sampling distribution (if the null hypothesis is true) can be made to approximate a chi-squared distribution as closely as desired by making the sample size large enough.
Chi-Square Goodness of Fit Test When an analyst attempts to fit a statistical model to observed data, he or she may wonder how well the model actually reflects the data. How "close" are the observed values to those which would be expected under the fitted model? One statistical test that addresses this issue is the chi-square goodness of fit test. This test is commonly used to test association of variables in two-way tables (see "Two-Way Tables and the Chi-Square Test"), where the assumed model of independence is evaluated against the observed data. In general, the chi-square test statistic is of the form

In the test for independence, the claim is that the row and column variables are independent of each other. This is the null hypothesis. The multiplication rule said that if two events were independent, then the probability of both occurring was the product of the probabilities of each occurring. This is key to working the test for independence. If you end up rejecting the null hypothesis, then the assumption must have been wrong and the row and column variable are dependent. Remember, all hypothesis testing is done under the assumption the null hypothesis is true. The test statistic used is the same as the chi-square goodness-of-fit test. The principle behind the test for independence is the same as the principle behind the goodness-of-fit test. The test for independence is always a right tail test. In fact, you can think of the test for independence as a goodness-of-fit test where the data is arranged into table form. This table is called a contingency table. The test statistic has a chi-square distribution when the following assumptions are met
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The data are obtained from a random sample The expected frequency of each category must be at least 5.

The following are properties of the test for independence

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The data are the observed frequencies. The data is arranged into a contingency table. The degrees of freedom are the degrees of freedom for the row variable times the degrees of freedom for the column variable. It is not one less than the sample size, it is the product of the two degrees of freedom. It is always a right tail test. It has a chi-square distribution. The expected value is computed by taking the row total times the column total and dividing by the grand total The value of the test statistic doesn't change if the order of the rows or columns are switched. The value of the test statistic doesn't change if the rows and columns are interchanged (transpose of the matrix) The test statistic is

What is the difference between correlation and linear regression?

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FAQ# 1141

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Correlation and linear regression are not the same. What is the goal? Correlation quantifies the degree to which two variables are related. Correlation does not fit a line through the data points. You simply are computing a correlation coefficient (r) that tells you how much one variable tends to change when the other one does. When r is 0.0, there is no relationship. When r is positive, there is a trend that one variable goes up as the other one goes up. When r is negative, there is a trend that one variable goes up as the other one goes down. Linear regression finds the best line that predicts Y from X. What kind of data? Correlation is almost always used when you measure both variables. It rarely is appropriate when one variable is something you experimentally manipulate. Linear regression is usually used when X is a variably you manipulate (time, concentration, etc.) Does it matter which variable is X and which is Y? With correlation, you don't have to think about cause and effect. It doesn't matter which of the two variables you call "X" and which you call "Y". You'll get the same correlation coefficient if you swap the two. The decision of which variable you call "X" and which you call "Y" matters in regression, as you'll get a different best-fit line if you swap the two. The line that best predicts Y from X is not the same as the line that predicts X from Y (however both those lines have the same value for R2) Assumptions The correlation coefficient itself is simply a way to describe how two variables vary together, so it can be computed and interpreted for any two variables. Further inferences, however, require an additional assumption -- that both X and Y are measured, and both are sampled from Gaussian distributions. This is called a bivariate Gaussian distribution. If those assumptions are true, then you can interpret the confidence interval of r and the P value testing the null hypothesis that there really is no correlation between the two variables (and any correlation you observed is a consequence of random sampling). With linear regression, the X values can be measured or can be a variable controlled by the experimenter. The X values are not assumed to be sampled from a Gaussian distribution. The distances of the points from the best-fit line is assumed to follow a Gaussian distribution, with the SD of the scatter not related to the X or Y values. Relationship between results Correlation computes the value of the Pearson correlation coefficient, r. Its value ranges from -1 to +1. Linear regression quantifies goodness of fit with r2, sometimes shown in uppercase as R2. If you put the same data into correlation (which is rarely appropriate; see above), the square of r from correlation will equal r2 from regression.

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Correlation analysis

Use the Correlation transformer to determine the extent to which changes in the value of an attribute (such as length of employment) are associated with changes in another attribute (such as salary). The data for a correlation analysis consists of two input columns. Each column contains values for one of the attributes of interest. The Correlation transformer can calculate various measures of association between the two input columns. You can select more than one statistic to calculate for a given pair of input columns. The data in the input columns also can be treated as a sample obtained from a larger population, and the Correlation transformer can be used to test whether the attributes are correlated in the population. In this context, the null hypothesis asserts that the two attributes are not correlated, and the alternative hypothesis asserts that the attributes are correlated. The Correlation transformer calculates any of the following correlation-related statistics on one or more pairs of columns:
In statistics, the Pearson product-moment correlation coefficient (sometimes referred to as the PPMCC or PCCs[1], and typically denoted by r) is a measure of the correlation (linear dependence) between two variables X and Y, giving a value between +1 and 1 inclusive. It is widely used in the sciences as a measure of the strength of linear dependence between two variables. It was developed by Karl Pearson from a similar but slightly different idea introduced by Francis Galton in the 1880s.[2][3] The correlation coefficient is sometimes called "Pearson's r."

What is the Correlation Coefficient? The correlation coefficient a concept from statistics is a measure of how well trends in the predicted values follow trends in past actual values. It is a measure of how well the predicted values from a forecast model "fit" with the real-life data. The correlation coefficient is a number between 0 and 1. If there is no relationship between the predicted values and the actual values the correlation coefficient is 0 or very low (the predicted values are no better than random numbers). As the strength of the relationship between the predicted values and actual values increases so does the correlation coefficient. A perfect fit gives a coefficient of 1.0. Thus the higher the correlation coefficient the better.