1. the Sample Correlation Coefficient
Computing
the Sample Correlation Coefficient

2. Sample Covariance Measure of “covariation” of two variables X - Y (=1 n (
-1)
cov ( x , y ) =

3. Sample Correlation Coefficient
Measure of “linear association” of two variables
cov ( x , y ) s X Y r =

4. The Range of the Correlation Coefficient- 1 r 1 r 2 1

5. Computing Cov(x,y) – ExampleS t o r e N o . U n i t S a l e s , Y P r o m o t i o n
(Y - Y
)(X - X ) ( i n 1 ) E x p e n d , X
Y - Y
X - X ( i n $ 1 ) 1 5 3 1 2 3 3 - 1 3 6 4 2 1 2 4 2 2 - 2 - 1 2 M e a n 4 3 1 2 4
sum of squares
sum

6. Computing the Sample Correlation Coefficient - Example