# Correlation and Dependence

Pages: 4 (734 words) Published: December 6, 2012
Correlation

Correlation Co-efficient Definition:
A measure of the strength of linear association between two variables. Correlation will always between -1.0 and +1.0. If the correlation is positive, we have a positive relationship. If it is negative, the relationship is negative.

Correlation
Correlation can be easily understood as co relation. To define. correlation is the average relationship between two or more variables. When the change in one variable makes or causes a change in other variable then there is a correlation between these two variables.

These correlated variables can move in the same direction or they can move in opposite direction. Not always there is a cause and effect relationship between the variables when there is a change; that might be due to uncertain change.

Simple Correlation is a correlation between two variables only; meaning the relationship between two variables. Event correlation and simple event correlation are the types of correlations mainly used in the industry point of view.

Types of Correlation

In Research Methodology of the Management, Correlation is broadly classified into six types as follows :

(1) Positive Correlation
(2) Negative Correlation
(3) Perfectly Positive Correlation
(4) Perfectly Negative Correlation
(5) Zero Correlation
(6) Linear Correlation

Positive Correlation

When two variables move in the same direction then the correlation between these two variables is said to be Positive Correlation. When the value of one variable increases, the value of other value also increases at the same rate.

For examplethe training and performance of employees in a company. Negative Correlation

In this type of correlation, the two variables move in the opposite direction.  When the value of a variable increases, the value of the other variable decreases.

For example, the relationship betwwen price and demand.

Perfect Positive Correlation

When there is a change in one...