Linear Correlation

Hope Sabao(PhD)

University of Lusaka

5th May, 2021

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Linear Correlation Coefficient

• This section describes the simple linear correlation, for short

linear correlation, which measures the strength of the linear
association between two variables.
• The correlation coefficient calculated for the population data
is denoted by ρ and the one calculated for sample data is
denoted by r .

Value of the Correlation Coefficient

The value of the correlation coefficient always lies in the range −1
to 1, that is,
−1 ≤ ρ ≤ 1 and − 1 ≤ r ≤ 1

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• If r = 1 it is said to be a perfect positive linear correlation. In
such a case, all points in the scatter diagram lie on a straight
line that slopes upward from left to right.
• If r = −1, the correlation is said to be a perfect negative linear
correlation. In this case, all points in the scatter diagram fall
on a straight line that slopes downward from left to right.
• If the points are scattered all over the diagram, as shown in
Figure (c), then there is no linear correlation between the two
variables, and consequently r is close to 0. Note that here r is
not equal to zero but is very close to zero.
• We do not usually encounter an example with perfect positive
or perfect negative correlation (unless the relationship
between variables is exact). What we observe in real-world
problems is either a positive linear correlation with 0 < r < 1.
• or a negative linear correlation with −1 < r < 0

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• If the correlation between two variables is positive and close to
1, we say that the variables have a strong positive linear
correlation.
• If the correlation between two variables is positive but close to
zero, then the variables have a weak positive linear correlation.
• In contrast, if the correlation between two variables is negative
and close to −1
• then the variables are said to have a strong negative linear
correlation. If the correlation between two variables is
negative but close to zero, there exists a weak negative linear
correlation between the variables.
• Graphically, a strong correlation indicates that the points in
the scatter diagram are very close to the regression line,

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Linear Correlation Coefficient

The simple linear correlation coefficient, denoted by r, measures

the strength of the linear relationship between two variables for a
sample and is calculated as
SSxy
r=p
Sxx Syy

Example
Calculate the correlation coefficient for the example on incomes
and food expenditures of seven households.

Solution
From earlier calculations made

Sxy = 447.5714, Sxx = 17728571, and Syy = 125.7143 (1)

Substituting these values in the formula for r , we obtain
Sxy 447.5714
r=p = p = 0.9481 = 0.95
Sxx SSyy ( 1772.8571)(125.7143)

Thus, the linear correlation coefficient is 0.95. The correlation

coefficient is usually rounded to two decimal places.

The linear correlation coefficient simply tells us how strongly the

two variables are (linearly) related. The correlation coefficient of
.95 for incomes and food expenditures of seven households
indicates that income and food expenditure are very strongly and
positively correlated. This correlation coefficient does not,
however, provide us with any more information.