Correlation, Applied Statistics

Assignment Help:

Correlation

The board of directors of Bata Company is faced with the problem of estimating what the annual sales might be in a shop to be opened in Bagpur where Bata has not operated before. They need this information in order to plan the size of the shop, the amount of stock to be put on the showcase, the number of employees to be hired. An answer to this problem may be found statistically by establishing the general relationship in the cities in which the company is already operating, say between the size of a city’s employed labor force or working population and sales in its Bata shops. From the size of Bagpur’s employed labor force, an estimation of the annual sales in that new shop can be estimated, and the board of directors should be able to base its decision on this estimate.

But the board will also want to know how good this estimate is, since it is based only on a general relationship between sales and employment. Further still, the board may want to compare the relationship existing between sales and labor force on one hand with the relationship existing between sales and number of shops on the other hand. Such problems can be solved through correlation analysis.

Correlation does not deal with one series but rather with the association or relationship between two series and does not measure variation in one series but rather compare variation in two or more series. The existence of correlation between variables does not necessarily mean that one is the cause of the movement in the other. It should be noted that the correlation analysis merely helps in determining the degree of association between two variables, but it does not tell anything about the cause and effect relationship.

Correlation analysis is based on the relationship between two or more variables. The degree of relationship between the variables under consideration is measured through the correlation analysis. The measure of correlation called correlation coefficient, summarizes in one figure the direction and degree of correlation. The direction of change is indicated by + or – signs; the former refers to the movement in the same direction and the latter in the opposite direction; an absence of correlation is indicated by zero. This coefficient ranges between –1 and 1. 


Related Discussions:- Correlation

Admissibility, Admissibility A very common concept which is applicable ...

Admissibility A very common concept which is applicable to any procedure of the statistical inference. The underlying notion is that the procedure/method is admissible if and o

Carry out a t-test, Suppose that before the minimum wage law change, the un...

Suppose that before the minimum wage law change, the underlying mean number of part-time employees per Burger King Restaurant in New Jersey was 20.3. It was thought that the increa

Determine nash equilibria, Two students are sitting in a lecture and consid...

Two students are sitting in a lecture and considering whether to ask a question from the professor (both of them are considering the same question). If they both ask, the questi

Level process control lab, Based on the following graphs (next page) you sh...

Based on the following graphs (next page) you should write a discussion report (2 pages) on: 1. Determination of whether the open-loop system response is consistent with a 1st o

Factor analysis, Factor analysis (FA) explains variability among observed r...

Factor analysis (FA) explains variability among observed random variables in terms of fewer unobserved random variables called factors. The observed variables are expressed in

Time series, merits and demerits of methods to determin trends

merits and demerits of methods to determin trends

Correlation coefficients, What type of correlation coefficient would you us...

What type of correlation coefficient would you use to examine the relationship between the following variables? Explain why you have selected the correlation coefficients. A. Re

ANOVA, Your company operates a machine shop, and, having heard you had expe...

Your company operates a machine shop, and, having heard you had experience in statistics and design of experiments, consulted you for your opinion on an experiment they want to run

Financial payments technology, Suppose the money supply process is now repr...

Suppose the money supply process is now represented by the following function: where m measures the sensitivity of money supply with respect to the interest rate. (i) Us

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd