Wednesday, June 30, 2010

How to Calculate Correlation Coefficient


Before I take you through on how to calculate coefficient.. let me first .. help you understand what is the meaning of correlation coefficient.

What is Correlation Coefficient?
Correlation Coefficient also called as Cross Correlation Coefficient. It is used to find the quality of the of least squares fitting to the given data. Calculates of the power of linear connection between two variables. Correlation is forever between -1.0 and +1.0. If the correlation is +ve, we have a +ve relationship If it is -ve, the relationship is -ve.

How to Calculate Correlation:-
Correlation Co-efficient :
Correlation(r) =[ NΣXY - (ΣX)(ΣY) / Sqrt([NΣX2 - (ΣX)2][NΣY2 - (ΣY)2])]
where
N = Number of values or elements
X = First Score
Y = Second Score
ΣXY = Sum of the product of first and Second Scores
ΣX = Sum of First Scores
ΣY = Sum of Second Scores
ΣX
2 = Sum of square First Scores
ΣY
2 = Sum of square Second Scores



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