Inferential

Statistics
Correlation and Simple Regression
 1. Correlation
2. Correlation Coefficient
3. R Squared
Agenda 4. Regression
5. Significance of correlation and regression
6. Application
 • Measures the degree to which two
Correlation variables move in relation to each
other
• Describes simple relationships
• Two possible relationships:
• Positively Correlated
• The two variables move in the same direction
• Negatively Correlated
• The two variables move in opposite directions
 • Measures the strength of the
relationship of two variables
Correlation • Expressed as “R”
Coefficient • Values range from -1.0 to 1.0
• The lower the value, the more it is
negatively correlated
• The higher the value, the more it
is positively correlated
• A value of 0.0 means that there is
no linear relationship between
the two variables
• Values between -0.8 and 0.8 are
not considered significant
 • Shows how much variation of the
R-squared dependent variable is explained by
the independent variable in the
regression model
• Expressed as “R2”
• Values range from 0 to 1.0
• 0.7 or above – High
• 0.4 to 0.69 – Moderate
• 0.39 or below - Low
Regression • Determines the strength and
character of the relationship
between a dependent variable
and an independent variable
• Simple Linear Regression
• One independent variable (x)
• One dependent variable (y)
Why is correlation and
regression significant?
 • Beers, B. (2021, October 30). Regression Definition.
Investopedia.
https://www.investopedia.com/terms/r/regression.asp#:
~:text=Simple%20linear%20regression%20uses%20one,a
s%20professionals%20in%20other%20businesses.
• Correlation. (n.d.). Retrieved from
https://www.jmp.com/en_ph/statistics-knowledge-
portal/what-is-correlation.html
• Fernando, J. (2021, October 5). Correlation Coefficient.
References Investopedia.
https://www.investopedia.com/terms/c/correlationcoeffi
cient.asp
• Fernando, J. (2021, September 12). R-Squared.
Investopedia. https://www.investopedia.com/terms/r/r-
squared.asp
• Hayes, A. (2022, March 10). Correlation. Investopedia.
https://www.investopedia.com/terms/c/correlation.asp#
:~:text=What%20Is%20a%20Correlation%3F,to%20have
%20a%20positive%20correlation.