The scatter plot can be a useful tool in understanding the type of relationship that exist

between the inputs (X’s) and the outputs (Y’s)

1. No Relationship: The scatter plot can give an obvious suggestion if the inputs and outputs
on the graph are not related. The points will be scattered throughout the graph with no
particular pattern. For no relationship to exist, points have to be completely diffused. If some
points are in concentration, then maybe a relationship does exist and our analysis has not
been able to uncover it.
2. Linear and Non-Linear: A linear correlation exists when all the points are plotted close
together. They form a distinct line. On the other hand points could be close together but
they could form a relationship which has curves in it. The nature of the relationship has wide
ranging implications.
3. Positive and Negative: A positive relationship between the inputs and the outputs is one
wherein more of one input leads to more of an output. This is also known as a direct
relationship.

On the other hand a negative relationship is one where more of one input leads to less of
another output. This is also known as an inverse relationship.

4. Strong and Weak: The strength of the correlation is tested by how closely the data fits the
shape. For instance if all the points are scattered very close together to form a very visible
line then the relationship is strongly linear. On the other hand, if the relationship does not so
obviously fit the shape then the relationship is weak.