Q.Write a short note on: Correlation

Correlation measures the degree and direction of relationship between two variables; it is positive when they move together, negative when they move in opposite directions, and ranges from minus 1 (perfect negative) through 0 (no correlation) to plus 1 (perfect positive).

This is a 2-mark short note in the AP Intermediate 2nd-year Economics statistics (correlation analysis) unit.

Correlation refers to the statistical relationship between two variables that tend to change together. It studies whether, and how closely, a change in one variable is associated with a change in another — for example, the relationship between price and demand, or between income and consumption. Correlation is positive (direct) when the two variables move in the same direction (both rise or both fall), and negative (inverse) when they move in opposite directions (one rises as the other falls). The degree of correlation is measured by the coefficient of correlation, whose value lies between minus 1 and plus 1: a value near plu …