Linear Correlation Coefficient Calculation NPS

Linear Correlation Coefficient Calculation

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What is a Linear Correlation Coefficient?

A linear correlation coefficient is a value that denotes the strength of the linear relationship between two variables; x and y. Two variables have a linear relationship when their equation can be graphed to form a line. 

The correlation coefficient, expressed as r, can indicate the strength and direction of the relationship between x and y. The value of r can range from -1 to +1. The sign of the linear correlation coefficient indicates the direction of the relationship between the two variables; a positive value indicates a positive relationship while a negative value indicates a negative relationship. The closer the value of r is to -1 or +1, the stronger the relationship is between the two variables. The closer the value of r is to 0, the weaker the relationship is between the two variables. A value of 0 indicates that there is no relationship between the two variables. 

Linear Correlation Coefficient Calculation NPS

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Requirements to use Pearson’s Correlation Coefficient

Although there are many different types of correlation coefficients, Pearson’s correlation coefficient is the most widely used. For this reason, when people refer to correlation coefficients, they’re often referring to Pearson’s correlation coefficient or Pearson’s R. 

Before we can delve into the correlation coefficient formula and its application, we must first consider the different requirements for Pearson’s correlation coefficient: 

  • The variables must be on an interval or ratio scale.  
  • There should be no outliers in the data. 
  • The variables should be (approximately) normally distributed.
  • The association must be linear.

How to Calculate the Linear Correlation Coefficient of a Dataset?

If your data meets the aforementioned requirements, you can use Pearson’s correlation coefficient formula to calculate your correlation coefficient (r).  

pxy =Cov(x,y)xy

Where, 

  • pxy : Pearson product-moment correlation coefficient
  • Cov(x,y): Covariance of variables x and y
  • x : Standard deviation of x
  • y : Standard deviation of y

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Strengths and Weaknesses of the Linear Correlation Coefficient Calculator

 Strengths

These are a few strengths of Pearson’s method of studying correlation: 

  • It indicates the presence or absence of correlation between data sets and also indicates the extent of the correlation. 
  • It indicates the direction of correlation (positive or negative).
  • It facilitates the estimation of the value of a dependent variable using a particular value of an independent variable as a reference (through regression equations). 

Weaknesses

These are a few weaknesses of Pearson’s method of studying correlation: 

  • Can be difficult to compute owing to the intricate algebraic methods used to calculate r. 
  • The value of r can be easily skewed in the presence of extreme items. 
  • It cannot distinguish between dependent and independent variables. 
  • It requires the computation of probable error for a fair interpretation of results as it is subject to error.

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FAQs on Linear Correlation Coefficient Calculator

A linear relationship, or linear association, describes the straight-line relationship between two variables. Any equation that forms a straight line when graphed depicts a linear relationship.

A linear correlation coefficient is a value that reflects the strength of the linear relationship between two variables, x and y.

The linear correlation coefficient between two variables can be calculated using Pearson’s correlation coefficient formula, which is; 

pxy =Cov(x,y)xy

The value of the correlation coefficient, r, indicates the strength and direction of the relationship between x and y. A value above 0 indicates a positive relationship while a value below 0 indicates a negative relationship. The closer the value is to -1 or +1, the stronger the relationship between the variables. The closer the value is to 0, the weaker the relationship between the variables.

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Hindol Basu 
GM, Voxco Intelligence

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