The Correlation Matrix

Cov (x , y )
r= ,
√ [ Var ( x ) ] [Var ( y )]
Cov(x , y)
r=
SD ( x ) x SD( y )
−1 /2 −1/ 2
R
⏟ =D⏟ S⏟ D
⏟
The selection of four receipts from a university book store was obtained. In order to investigate the
nature of book sale each receipt provided among other things. The no of book sold and the price is
given below

Price 42 52 48 58
No of books 4 5 4 3

Identify the data matrix

Find sample mean vector

Find sample variance covariance matrix

Find sample correlation matrix

42 4

[ ]
⏟X = 52 5 the order of this matrix is 4x2
48 4

The sample mean vector is

x= [504 ]
1
S⏟ = [ 42 ∗[ 42 4 ] + 52 ∗[ 52 5 ] + 48 ∗ [ 48 4 ] + 58 ∗[ 58 3 ] −4 50 ∗[ 50 4 ] ]
3 [4] [5] [4 ] [3 ] [ ]
4

1
S⏟ = [ 42 ∗[ 42 4 ] + 52 ∗[ 52 5 ] + 48 ∗ [ 48 4 ] + 58 ∗[ 58 3 ] −4 50 ∗[ 50
3 [4] [5] [4 ] [3 ] [4] 4] ]

1
S⏟ = ¿
3

S⏟ = 45.34 −2
[−2 0.6667 ]