CORRELATION

Data Analytics

Morgan Laymon, Logan Stagmaier, Adrianna Pretzer

 RECAP OF
CORRELATION
Correlation
● Correlation is the relationship between two variables
○ It is regularly used to distinguish and predict future results
based on what is on hand

● Based on a positive response, negative response, and can even reflect zero
relationships present

● The plots and the distance away from your correlation line within your
graph helps to indicate whether you have a strong or weak relationship
The Statistical Significance
Cor. CoEff. Formula

It is Standardized!

Positive Relationship: r = +1

Negative Relationship: r= -1

No relationship r= 0
P-Value

As P-Value is less than

0.05, you can trust the
statistical significance
Data collected from The Economist
APPLICATION OF
CORRELATION
Why Do Businesses
Use Correlation?
A business will use correlation to
determine if there is a relationship
between two variables. For example
if a company sells toys they might
check the correlation between the
toy and age group that bought it.
What Does The
Relationship tell us?
The relationship between two
variables can be positive, negative
or have no correlation. The closer
they are to the line the stronger the
relationship is.

Businesses do not always analyze reliable data, when this happens correlation is useless.
 CODING
IMPLEMENTATION OF
CORRELATION
Correlation Application: Python
Potential Outliers in Correlation
Potential Outliers in Correlation
THANK YOU!