- 105 Downloads
Correlation measures the linear association strength between two numerical variables. The strength is expressed by the correlation coefficient which must be in the range of -1 to 1 inclusively. Given two variables X and Y, if they are positively correlated, then X and Y go in the same direction. For example, X is the daily temperature and Y is the ice cream sale. The higher the X, the larger the Y; or the lower the X, the smaller the Y. If X and Y are negatively correlated, then they go in the opposite directions. For example, the car mileage and car weight. When the correlation coefficient is close to zero, there is no correlation between X and Y. The computation of correlation coefficient is very simple in Excel by the function CORREL. This is shown in Figure 10-1.