Chapter 10

Chapter 10
Correlation and Regression
Bluman, Chapter 10 1
Friday, January 25, 13 1

Chapter 10 Overview
Introduction
10-1 Scatter Plots and Correlation
10-2 Regression
10-3 Coefficient of Determination and
Standard Error of the Estimate
10-4 Multiple Regression (Optional)

Chapter 10 Objectives
1. Draw a scatter plot for a set of ordered pairs.
2. Compute the correlation coefficient.
3. Test the hypothesis H0: = 0.
4. Compute the equation of the regression line.
5. Compute the coefficient of determination.
6. Compute the standard error of the estimate.
7. Find a prediction interval.
8. Be familiar with the concept of multiple
regression.

Introduction

Introduction
In addition to hypothesis testing and
confidence intervals, inferential statistics
involves determining whether a
relationship between two or more
numerical or quantitative variables exists.

Introduction

Introduction
Correlation is a statistical method used
to determine whether a linear relationship
between variables exists.
Regression is a statistical method used

to describe the nature of the relationship
between variablesthat is, positive or
negative, linear or nonlinear.

Introduction

Introduction
The purpose of this chapter is to answer
these questions statistically:
1. Are two or more variables related?
2. If so, what is the strength of the
relationship?
3. What type of relationship exists?
4. What kind of predictions can be
made from the relationship?

Introduction

Introduction
1. Are two or more variables related?
2. If so, what is the strength of the
relationship?
To answer these two questions, statisticians use
the correlation coefficient, a numerical measure
to determine whether two or more variables are
related and to determine the strength of the
relationship between or among the variables.

Introduction

Introduction
There are two types of relationships: simple and
multiple.

Introduction
multiple.

Introduction
multiple.
In a simple relationship, there are two variables:
an independent variable (predictor variable) and
a dependent variable (response variable).

Introduction
multiple.

Introduction
multiple.
In a multiple relationship, there are two or more
independent variables that are used to predict one
dependent variable.

Introduction

Introduction
4. What kind of predictions can be made
from the relationship?
Predictions are made in all areas and daily.
Examples include weather forecasting, stock
market analyses, sales predictions, crop
predictions, gasoline price predictions, and sports
predictions. Some predictions are more accurate
than others, due to the strength of the relationship.
That is, the stronger the relationship is between
variables, the more accurate the prediction is.

10.1 Scatter Plots and Correlation

10.1 Scatter Plots and Correlation
A scatter plot is a graph of the ordered
pairs (x, y) of numbers consisting of the
independent variable x and the
dependent variable y.

Chapter 10
Section 10-1
Example 10-1
Page #536

Example 10-1: Car Rental Companies
Construct a scatter plot for the data shown for car rental
companies in the United States for a recent year.

Step 1: Draw and label the x and y axes.


Step 2: Plot each point on the graph.










Positive Relationship

Chapter 10
Section 10-1
Example 10-2
Page #537

Example 10-2: Absences/Final Grades
Construct a scatter plot for the data obtained in a study on
the number of absences and the final grades of seven
randomly selected students from a statistics class.














Negative Relationship

Chapter 10
Section 10-1
Example 10-3
Page #538

Example 10-3: Exercise/Milk Intake
the number of hours that nine people exercise each week
and the amount of milk (in ounces) each person consumes
per week.

per week.

per week.














Very Weak Relationship

Correlation
The correlation coefficient computed from the
sample data measures the strength and
direction of a linear relationship between two
variables.

Correlation
variables.
There are several types of correlation
coefficients. The one explained in this section is
called the Pearson product moment
correlation coefficient (PPMC).

Correlation
variables.
There are several types of correlation
coefficients. The one explained in this section is
called the Pearson product moment
correlation coefficient (PPMC).
The symbol for the sample correlation
coefficient is r. The symbol for the population
correlation coefficient is .

Correlation
The range of the correlation coefficient is from
1 to +1.

Correlation
1 to +1.
If there is a strong positive linear relationship
between the variables, the value of r will be
close to +1.

Correlation
1 to +1.
close to +1.
If there is a strong negative linear
relationship between the variables, the value
of r will be close to 1.

Correlation
1 to +1.
close to +1.
If there is a strong negative linear
relationship between the variables, the value
of r will be close to 1.

Correlation

Correlation

Correlation

Correlation

Correlation

Correlation

Correlation

Correlation Coefficient

Correlation Coefficient
The formula for the correlation coefficient is
where n is the number of data pairs.
Rounding Rule: Round to three decimal places.

Chapter 10
Section 10-1
Example 10-4
Page #540

Compute the correlation coefficient for the data in Example
101.
Cars x Income y
Company (in 10,000s) (in billions) xy x2 y2
A 63.0 7.0
B 29.0 3.9
C 20.8 2.1
D 19.1 2.8
E 13.4 1.4
F 8.5 1.5

101.
Cars x Income y
A 63.0 7.0 441.00
B 29.0 3.9 113.10
C 20.8 2.1 43.68
D 19.1 2.8 53.48
E 13.4 1.4 18.76
F 8.5 1.5 2.75

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00
B 29.0 3.9 113.10 841.00
C 20.8 2.1 43.68 432.64
D 19.1 2.8 53.48 364.81
E 13.4 1.4 18.76 179.56
F 8.5 1.5 2.75 72.25

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00 49.00
B 29.0 3.9 113.10 841.00 15.21
C 20.8 2.1 43.68 432.64 4.41
D 19.1 2.8 53.48 364.81 7.84
E 13.4 1.4 18.76 179.56 1.96
F 8.5 1.5 2.75 72.25 2.25

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00 49.00
B 29.0 3.9 113.10 841.00 15.21
C 20.8 2.1 43.68 432.64 4.41
D 19.1 2.8 53.48 364.81 7.84
E 13.4 1.4 18.76 179.56 1.96
F 8.5 1.5 2.75 72.25 2.25
x =
153.8

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00 49.00
B 29.0 3.9 113.10 841.00 15.21
C 20.8 2.1 43.68 432.64 4.41
D 19.1 2.8 53.48 364.81 7.84
E 13.4 1.4 18.76 179.56 1.96
F 8.5 1.5 2.75 72.25 2.25
x = y =
153.8 18.7

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00 49.00
B 29.0 3.9 113.10 841.00 15.21
C 20.8 2.1 43.68 432.64 4.41
D 19.1 2.8 53.48 364.81 7.84
E 13.4 1.4 18.76 179.56 1.96
F 8.5 1.5 2.75 72.25 2.25
x = y = xy =
153.8 18.7 682.77

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00 49.00
B 29.0 3.9 113.10 841.00 15.21
C 20.8 2.1 43.68 432.64 4.41
D 19.1 2.8 53.48 364.81 7.84
E 13.4 1.4 18.76 179.56 1.96
F 8.5 1.5 2.75 72.25 2.25
x = y = xy = x2 =
153.8 18.7 682.77 5859.26

101.
Cars x Income y
A 63.0 7.0 441.00 3969.00 49.00
B 29.0 3.9 113.10 841.00 15.21
C 20.8 2.1 43.68 432.64 4.41
D 19.1 2.8 53.48 364.81 7.84
E 13.4 1.4 18.76 179.56 1.96
F 8.5 1.5 2.75 72.25 2.25
x = y = xy = x2 = y2 =
153.8 18.7 682.77 5859.26 80.67

101.
x = 153.8, y = 18.7, xy = 682.77, x2 = 5859.26,
y2 = 80.67, n = 6

101.
x = 153.8, y = 18.7, xy = 682.77, x2 = 5859.26,
y2 = 80.67, n = 6

101.
x = 153.8, y = 18.7, xy = 682.77, x2 = 5859.26,
y2 = 80.67, n = 6

101.
x = 153.8, y = 18.7, xy = 682.77, x2 = 5859.26,
y2 = 80.67, n = 6

Chapter 10
Section 10-1
Example 10-5
Page #541

102.
Number of Final Grade
Student absences, x y (pct.) xy x2 y2
A 6 82
B 2 86
C 15 43
D 9 74
E 12 58
F 5 90
G 8 78

102.
A 6 82 492
B 2 86 172
C 15 43 645
D 9 74 666
E 12 58 696
F 5 90 450
G 8 78 624

102.
A 6 82 492 36
B 2 86 172 4
C 15 43 645 225
D 9 74 666 81
E 12 58 696 144
F 5 90 450 25
G 8 78 624 64

102.
A 6 82 492 36 6,724
B 2 86 172 4 7,396
C 15 43 645 225 1,849
D 9 74 666 81 5,476
E 12 58 696 144 3,364
F 5 90 450 25 8,100
G 8 78 624 64 6,084

102.
A 6 82 492 36 6,724
B 2 86 172 4 7,396
C 15 43 645 225 1,849
D 9 74 666 81 5,476
E 12 58 696 144 3,364
F 5 90 450 25 8,100
G 8 78 624 64 6,084
x =
57

102.
A 6 82 492 36 6,724
B 2 86 172 4 7,396
C 15 43 645 225 1,849
D 9 74 666 81 5,476
E 12 58 696 144 3,364
F 5 90 450 25 8,100
G 8 78 624 64 6,084
x = y =
57 511

102.
A 6 82 492 36 6,724
B 2 86 172 4 7,396
C 15 43 645 225 1,849
D 9 74 666 81 5,476
E 12 58 696 144 3,364
F 5 90 450 25 8,100
G 8 78 624 64 6,084
x = y = xy =
57 511 3745

102.
A 6 82 492 36 6,724
B 2 86 172 4 7,396
C 15 43 645 225 1,849
D 9 74 666 81 5,476
E 12 58 696 144 3,364
F 5 90 450 25 8,100
G 8 78 624 64 6,084
x = y = xy = x 2 =
57 511 3745 579

102.
A 6 82 492 36 6,724
B 2 86 172 4 7,396
C 15 43 645 225 1,849
D 9 74 666 81 5,476
E 12 58 696 144 3,364
F 5 90 450 25 8,100
G 8 78 624 64 6,084
x = y = xy = x 2 = y2 =
57 511 3745 579 38,993

102.
x = 57, y = 511, xy = 3745, x2 = 579,
y2 = 38,993, n = 7

102.
x = 57, y = 511, xy = 3745, x2 = 579,
y2 = 38,993, n = 7

102.
x = 57, y = 511, xy = 3745, x2 = 579,
y2 = 38,993, n = 7

102.
x = 57, y = 511, xy = 3745, x2 = 579,
y2 = 38,993, n = 7

Chapter 10
Section 10-1
Example 10-6
Page #542

103.
Subject Hours, x Amount y xy x2 y2

A 3 48
B 0 8
C 2 32
D 5 64
E 8 10
F 5 32
G 10 56
H 2 72
I 1 48

103.

A 3 48 144
B 0 8 0
C 2 32 64
D 5 64 320
E 8 10 80
F 5 32 160
G 10 56 560
H 2 72 144
I 1 48 48

103.

A 3 48 144 9
B 0 8 0 0
C 2 32 64 4
D 5 64 320 25
E 8 10 80 64
F 5 32 160 25
G 10 56 560 100
H 2 72 144 4
I 1 48 48 1

103.

A 3 48 144 9 2,304
B 0 8 0 0 64
C 2 32 64 4 1,024
D 5 64 320 25 4,096
E 8 10 80 64 100
F 5 32 160 25 1,024
G 10 56 560 100 3,136
H 2 72 144 4 5,184
I 1 48 48 1 2,304

103.

A 3 48 144 9 2,304
B 0 8 0 0 64
C 2 32 64 4 1,024
D 5 64 320 25 4,096
E 8 10 80 64 100
F 5 32 160 25 1,024
G 10 56 560 100 3,136
H 2 72 144 4 5,184
I 1 48 48 1 2,304
x =
36

103.

A 3 48 144 9 2,304
B 0 8 0 0 64
C 2 32 64 4 1,024
D 5 64 320 25 4,096
E 8 10 80 64 100
F 5 32 160 25 1,024
G 10 56 560 100 3,136
H 2 72 144 4 5,184
I 1 48 48 1 2,304
x = y =
36 370

103.

A 3 48 144 9 2,304
B 0 8 0 0 64
C 2 32 64 4 1,024
D 5 64 320 25 4,096
E 8 10 80 64 100
F 5 32 160 25 1,024
G 10 56 560 100 3,136
H 2 72 144 4 5,184
I 1 48 48 1 2,304
x = y = xy =
36 370 1,520

103.

A 3 48 144 9 2,304
B 0 8 0 0 64
C 2 32 64 4 1,024
D 5 64 320 25 4,096
E 8 10 80 64 100
F 5 32 160 25 1,024
G 10 56 560 100 3,136
H 2 72 144 4 5,184
I 1 48 48 1 2,304
x = y = xy = x 2 =
36 370 1,520 232

103.

A 3 48 144 9 2,304
B 0 8 0 0 64
C 2 32 64 4 1,024
D 5 64 320 25 4,096
E 8 10 80 64 100
F 5 32 160 25 1,024
G 10 56 560 100 3,136
H 2 72 144 4 5,184
I 1 48 48 1 2,304
x = y = xy = x 2 = y2 =
36 370 1,520 232 19,236

103.
x = 36, y = 370, xy = 1520, x2 = 232,
y2 = 19,236, n = 9

103.
x = 36, y = 370, xy = 1520, x2 = 232,
y2 = 19,236, n = 9

103.
x = 36, y = 370, xy = 1520, x2 = 232,
y2 = 19,236, n = 9

103.
x = 36, y = 370, xy = 1520, x2 = 232,
y2 = 19,236, n = 9

Hypothesis Testing
In hypothesis testing, one of the following is
true:

Hypothesis Testing
true:
H0: = 0 This null hypothesis means that
there is no correlation between
the x and y variables in the
population.

Hypothesis Testing
true:
population.

Hypothesis Testing
true:
population.
H 1: 0 This alternative hypothesis means
that there is a significant correlation
between the variables in the
population.

t Test for the Correlation Coefficient

Chapter 10
Section 10-1
Example 10-7
Page #544

Test the significance of the correlation coefficient found in
Example 104. Use = 0.05 and r = 0.982.

Example 104. Use = 0.05 and r = 0.982.
Step 1: State the hypotheses.

H0: = 0 and H1: 0

Example 104. Use = 0.05 and r = 0.982.

H0: = 0 and H1: 0

Example 104. Use = 0.05 and r = 0.982.

H0: = 0 and H1: 0
Step 2: Find the critical value.

Example 104. Use = 0.05 and r = 0.982.

H0: = 0 and H1: 0
Step 2: Find the critical value.

Since = 0.05 and there are 6 2 = 4 degrees of
freedom, the critical values obtained from Table F
are 2.776.




Step 3: Compute the test value.

Step 4: Make the decision.



Reject the null hypothesis.


Reject the null hypothesis.
Step 5: Summarize the results.

There is a significant relationship between the
number of cars a rental agency owns and its
annual income.

Chapter 10
Section 10-1
Example 10-8
Page #545

Using Table I, test the significance of the correlation
coefficient r = 0.067, from Example 106, at = 0.01.

H0: = 0 and H1: 0

H0: = 0 and H1: 0
There are 9 2 = 7 degrees of freedom. The value in

Table I when = 0.01 is 0.798.

H0: = 0 and H1: 0

For a significant relationship, r must be greater than 0.798
or less than -0.798. Since r = 0.067, do not reject the null.

H0: = 0 and H1: 0

Hence, there is not enough evidence to say that there is a
significant linear relationship between the variables.

H0: = 0 and H1: 0

Hence, there is not enough evidence to say that there is a
significant linear relationship between the variables.

Possible Relationships Between
Variables
When the null hypothesis has been rejected for a specific
a value, any of the following five possibilities can exist.

Variables
1. There is a direct cause-and-effect relationship
between the variables. That is, x causes y.

Variables
2. There is a reverse cause-and-effect relationship
between the variables. That is, y causes x.

Variables
3. The relationship between the variables may be
caused by a third variable.

Variables
4. There may be a complexity of interrelationships
among many variables.

Variables
4. There may be a complexity of interrelationships
among many variables.
5. The relationship may be coincidental.

Variables

Variables
For example,
water causes plants to grow
poison causes death
heat causes ice to melt

Variables

Variables
For example,
Suppose a researcher believes excessive coffee
consumption causes nervousness, but the
researcher fails to consider that the reverse
situation may occur. That is, it may be that an
extremely nervous person craves coffee to calm his
or her nerves.

Variables

Variables
3. The relationship between the variables may be caused
by a third variable.
For example,
If a statistician correlated the number of deaths due
to drowning and the number of cans of soft drink
consumed daily during the summer, he or she
would probably find a significant relationship.
However, the soft drink is not necessarily
responsible for the deaths, since both variables
may be related to heat and humidity.

Variables

Variables
4. There may be a complexity of interrelationships among
many variables.
For example,
A researcher may find a significant relationship
between students high school grades and college
grades. But there probably are many other
variables involved, such as IQ, hours of study,
influence of parents, motivation, age, and
instructors.

Variables

Variables
5. The relationship may be coincidental.
For example,
A researcher may be able to find a significant
relationship between the increase in the number of
people who are exercising and the increase in the
number of people who are committing crimes. But
common sense dictates that any relationship
between these two values must be due to
coincidence.

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Chapter 10

Correlation and Regression

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Regression is a statistical method used

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Step 1: Draw and label the x and y axes.

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Step 1: Draw and label the x and y axes.

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Step 1: Draw and label the x and y axes.

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Step 1: Draw and label the x and y axes.

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