QUANTUM UNIVERSITY
ROORKEE
TUSHAR SAINI
BACHELOR OF BUSINESS ADMINISTRATION
SEC: B
SUBJECT: BUSINESS ANALYTICS
TOPIC: CORRELATION AND REGRESSION
CORRELATION
Correlation refers to a process for establishing the
relationships between two variables. You learned a
way to get a general idea about whether or not two
variables are related, is to plot them on a “scatter
plot”. While there are many measures of association
for variables which are measured at the ordinal or
higher level of measurement, correlation is the most
commonly used approach.
TYPE OF CORRELATION
• The scatter plot explains the correlation between the two attributes or
variables. It represents how closely the two variables are connected. There
can be three such situations to see the relation between the two variables –
Positive Correlation – when the values of the two variables move in the
same direction so that an increase/decrease in the value of one variable is
followed by an increase/decrease in the value of the other variable.
Negative Correlation – when the values of the two variables move in the
opposite direction so that an increase/decrease in the value of one variable
is followed by decrease/increase in the value of the other variable.
No Correlation – when there is no linear dependence or no relation between
the two variables.
REGRESSION
• Regression is a statistical method used in
finance, investing, and other disciplines
that attempts to determine the strength and
character of the relationship between one
dependent variable (usually denoted by Y)
and a series of other variables (known as
independent variables).
UNDERSTANDING REGRESSION
Regression captures the correlation between variables
observed in a data set and quantifies whether those
correlations are statistically significant or not.
The two basic types of regression are simple linear regression
and multiple linear regression, although there are nonlinear
regression methods for more complicated data and analysis.
Simple linear regression uses one independent variable to
explain or predict the outcome of the dependent variable Y, while
multiple linear regression uses two or more independent
variables to predict the outcome (while holding all others
constant)
TYPES OF REGRESSIONS
DIFFERENCE BETWEEN
CORRELATION AND REGRESSION
CORRELATION REGESSION
• Correlation’, as the name says, it • Regression’ explains how an
determines the interconnection or a independent variable is numerically
co-relationship between the variables. associated with the dependent
variable.
• Correlation, both the independent
and dependent values have no • However, in Regression,
difference. both the dependent and
independent variables
are different.
• The primary objective of
Correlation is to find out a • Regression’s main purpose is to
quantitative/numerical value calculate the values of a random
expressing the association variable based on the values of
between the values. a fixed variable.
