Correlation Analysis

A statistical technique that is used to analyze

the strength and direction of the relationship
between two quantitative variables is called
correlation analysis.
The coefficient of correlation is a number that
indicates the strength and direction of
statistical relationship between two variables.
 Types of Correlation
Positive and negative

X: 5 8 10 15 17
Y: 10 12 16 18 20

X: 5 8 10 15 17
Y: 20 18 16 12 10
 Linear Correlation: when variations in the values of two
variables have a constant ratio.

X: 10 20 30 40 50
Y: 40 60 80 100 120

Non-linear Correlation: when variations in the values of

two variables do not have a constant ratio.

X: 8 9 9 10 12
Y: 40 50 80 100 120
 Simple correlation: if only two variables are chosen to
study correlation between them.
sales revenue w.r.t. money spent on ads.
Partial correlation: two variables are chosen to study
the correlation between them, but the effect of other
variables is kept constant.
yield of a crop is influenced by amount of fertilizers
applied, keeping other variables constant, like rainfall,
quality of seeds, type of soil.
Multiple correlation: the relationship between more
than three variables is considered simultaneously
Employee-employer relationship w.r.t. training and
development facilities, medical, housing, salary
structure etc.