Pearsons Correlation

Prepared by: Ankit Detroja Jaimin Prajapati Khamosh Patel Ravi Gharchar Jayesh Sindhav

Introduction
Developed by Karl Pearson from a related idea introduced by Francis Galton in the 1880s In statistics, the Pearson product-moment correlation coefficient (sometimes referred to as the PPMCC or PCC, or Pearson's r) is a measure of the linear correlation (dependence) between two variables X and Y. It only provides information about the direction and strength of the linear relationship between the two variables.

Pearsons Correlation Coefficient

It is a statistical measure of the strength of a linear relationship between paired data and denoted by r. It is ranging from -1 to +1. Characteristics:
Positive values denote positive linear correlation. Negative values denote negative linear correlation. A value of 0 denotes no linear correlation. The closer the value is to 1 or 1, the stronger the linear correlation.

The correlation coefficient does not relate to the gradient beyond sharing its +ve or ve sign. The correlation coefficient is a measure of linear relationship and thus a value of does not imply there is no relationship between the variables. For example in the following scatterplot which implies no (linear) correlation however there is a perfect quadratic relationship.

Evans (1996) suggests for the absolute value of r as follows: .00-.19 very weak
.20-.39 weak .40-.59 moderate .60-.79 strong .80-1.0 very strong

 Three different sums of squares (SS) are required

The sum of squares for variable X

The sum of square for variable Y

The sum of the cross-product of XY.

So, the correlation coefficient can be given as follows:

Coefficient of Determination: It is the square of the correlation coefficient (r2). It quantifies the proportion of the variance of one variable explained (in a statistical sense, not a causal sense) by the other.

Hypothesis Testing
It is performed for checking the existence of linearity between the variables. Two hypothesis:
Null Hypothesis (H0 no correlation) o If the absolute value of the obtained r is less than the rcritical (determined from r-table for appropriate degree of freedom), then retain the null hypothesis and conclude that there is no linear relationship between the two variables, in the population represented by the sample.

 Alternative Hypothesis (H1 correlation exists) o If the absolute value of the obtained r is greater than the r-critical, then retain the alternative hypothesis and conclude that there is a linear relationship between the variables in the population represented in the sample.