Input Data :
Data set x = 1, 2, 4, 5, 8
Data set y = 5, 20, 40, 80, 100
Total number of elements = 5
Objective :
Find what is correlation coefficient for given input data?
Solution :
`x_i = `1, 2, 4, 5, 8 Mean `\mu_X = 20/5 = 4`
`y_i = `5, 20, 40, 80, 100 Mean `\mu_Y = 245/5 = 49`
`(x_i - \mu_X)` | `(x_i - \mu_X)^2` | `(y_i - \mu_Y)` | `(y_i - \mu_Y)^2` | `(x_i - \mu_X)(y_i - \mu_Y)` |
---|---|---|---|---|
-3 | 9 | -44 | 1936 | 132 |
-2 | 4 | -29 | 841 | 58 |
0 | 0 | -9 | 81 | -0 |
1 | 1 | 31 | 961 | 31 |
4 | 16 | 51 | 2601 | 204 |
`\sum(x_i - \mu_X)^2``=30` | `\sum(y_i - \mu_Y)^2``=6420` | `\sum(x_i - \mu_X)(y_i - \mu_Y)``=425` |
Correlation Coefficient calculator measures the degree of dependence or linear correlation between two random samples $X$ and $Y$ or two sets of population data. It's an online statistics and probability tool requires two random samples $X$ and $Y$ or two sets of population data. In other words, it measures how strongly and in which direction the linear relationship between the the two data sets.
It is necessary to follow the next steps:
Let us consider two variables,
Let $X=(x_1,\ldots,x_n)$ and $Y=(y_1,\ldots, y_n)$ be samples of $n$ outcomes. The means of these samples are
The correlation coefficient is useful in finance. For example, in determining how well a mutual fund performs relative to its benchmark index, or another fund.
Practice problems of the correlation coefficient are provided using data from statistical simulations as well as real data.
Practice Problem 1: Find the correlation coefficient of the data in the table which shows the relationship between temperature and the weakness felt in various extremities.
body temperature | Number of extremities |
---|---|
$38.2^o$ | $4$ |
$37.5^o$ | $7$ |
$37.9^o$ | $6$ |
$39.2^o$ | $10$ |
$40^o$ | $12$ |
$36.9^o$ | $2$ |
$39.1^o$ | $5$ |
Number of extremities | Statistics | |
Monday | 134 | 231 |
Tuesday | 156 | 127 |
Wednesday | 234 | 276 |
Thursday | 214 | 265 |
Friday | 301 | 124 |