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Questions and Answers
What does the Pearson correlation coefficient measure?
What does the Pearson correlation coefficient measure?
The linear association between continuous variables.
How can you interpret a positive Pearson correlation coefficient?
How can you interpret a positive Pearson correlation coefficient?
A and B are positively correlated, meaning that the values of A increase as the values of B increase.
What does a Pearson correlation coefficient of 0 indicate?
What does a Pearson correlation coefficient of 0 indicate?
A and B are independent and there is no correlation between them.
How is a negative Pearson correlation coefficient interpreted?
How is a negative Pearson correlation coefficient interpreted?
What is covariance between two attributes A and B?
What is covariance between two attributes A and B?
How can you interpret covariance for two attributes that tend to change together?
How can you interpret covariance for two attributes that tend to change together?
What does a positive covariance between attributes A and B indicate?
What does a positive covariance between attributes A and B indicate?
In correlation analysis, what does a negative covariance between A and B indicate?
In correlation analysis, what does a negative covariance between A and B indicate?
What does a covariance value of 0 indicate about the attributes A and B?
What does a covariance value of 0 indicate about the attributes A and B?
Can two random variables have a covariance of 0 and still not be independent?
Can two random variables have a covariance of 0 and still not be independent?
In the context of stock prices, if two stocks are affected by the same industry trends, what does it mean if their covariance is positive?
In the context of stock prices, if two stocks are affected by the same industry trends, what does it mean if their covariance is positive?
Based on the given stock prices example, if the covariance between the stocks is negative, what does it suggest about their prices?
Based on the given stock prices example, if the covariance between the stocks is negative, what does it suggest about their prices?
What is the purpose of correlation analysis in business and statistical models?
What is the purpose of correlation analysis in business and statistical models?
How can correlation be useful in predicting one quantity from another?
How can correlation be useful in predicting one quantity from another?
What does the Pearson Correlation Coefficient measure?
What does the Pearson Correlation Coefficient measure?
How is correlation coefficient calculated in correlation analysis?
How is correlation coefficient calculated in correlation analysis?
Why is correlation considered a basic quantity and foundation for many modeling techniques?
Why is correlation considered a basic quantity and foundation for many modeling techniques?
What role does correlation play in indicating the presence of a causal relationship?
What role does correlation play in indicating the presence of a causal relationship?
Study Notes
- Pearson correlation measures the linear association between continuous variables, with a coefficient ranging from +1 to -1.
- A positive correlation indicates that as one variable increases, the other also increases, while a negative correlation means one decreases as the other increases.
- Correlation can help predict one quantity from another and may suggest a causal relationship, but not always.
- Covariance is another measure to assess how two attributes change together, with positive covariance indicating both tend to be above their expected values.
- Covariance of 0 means attributes are independent, but a covariance of 0 does not always imply independence, especially without additional assumptions like multivariate normal distributions.
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Description
Test your knowledge on Pearson correlation coefficient, which measures the linear association between continuous variables. Understand how the correlation coefficient ranges between +1 and -1, indicating the strength and direction of the relationship between variables.
