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Correlation and Regression

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10 views15 pages

Correlation and Regression

Uploaded by

nitikesh31
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Correlation and Simple

Linear Regression
Dr. Ramzan Tahir
Correlation

 Correlation is defined as the statistical association between two variables.

 A relationship has no correlation when the points on a scatterplot do not


show any pattern.
 A relationship is non-linear when the points on a scatterplot follow a pattern
but not a straight line.
 A relationship is linear when the points on a scatterplot follow a somewhat
straight line pattern. This is the relationship that we will examine.
Types of linear relationship

 Linear relationships can be either positive or negative.


 Positive relationships have points that incline upwards to the right.
As x values increase, y values increase.
 Negative relationship: As x values decrease, y values decrease.
Types of RElationship
How to Measure Correlation
 Correlation Coefficient (r)

 Or

Also referred as Pearson’s Correlation Coefficient


The properties of “r”

 It is always between -1 and +1.


 It is a unitless measure so “r” would be the same value whether you
measured the two variables in pounds and inches or in grams and
centimeters.
 Positive values of “r” are associated with positive relationships.
 Negative values of “r” are associated with negative relationships.
Examples of Positive Correlation
Examples of Negative Correlation
Importance of Scatter plots

• Both of these data sets have an r = 0.01, but they are very different. Plot 1 shows little
linear relationship / or no relationship between x and y variables. Plot 2 shows a
strong non-linear relationship.
• Pearson’s linear correlation coefficient only measures the strength and direction of a
linear relationship.
• Ignoring the scatterplot could result in a serious mistake when describing the
relationship between two variables.
Correlation to Regression

 When you investigate the relationship between two variables, always begin
with a scatterplot. This graph allows you to look for patterns (both linear and
non-linear).
 The next step is to quantitatively describe the strength and direction of the
linear relationship using “r”.
 Once you have established that a linear relationship exists, you can take
the next step in model building.
simple linear regression

 Once we have identified two variables that are correlated, we would like
to model this relationship. We want to use one variable as
a predictor or explanatory variable to explain the other variable,
the response or dependent variable. In order to do this, we need a good
relationship between our two variables. The model can then be used to
predict changes in our response variable. A strong relationship between
the predictor variable and the response variable leads to a good model.

 A simple linear regression model is a mathematical equation that allows us


to predict a response for a given predictor value.
Linear Regression Equation

where b0 is the y-intercept, b1 is the slope, x is the predictor variable, and ŷ an estimate of
the mean value of the response variable for any value of the predictor variable.
The y-intercept is the predicted value for the response (y) when x = 0. The slope describes
the change in y for each one unit change in x. Let’s look at this example to clarify the
interpretation of the slope and intercept.
Regression Equation

There is a relationship between correlation coefficient and regression coefficient


Criteria for best fit line

 The criterion to determine the line that best describes the relation between
two variables is based on the residuals.
Residual = Observed – Predicted
 Which gives the minimum residual
Residual: Linear regression

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