Page 52 - BA2 Integrated Workbook - Student 2017
P. 52
Chapter 3
5.3 Coefficient of determination
We have seen how Pearson's correlation coefficient allows us to discuss the strength
of the relationship between two sets of figures. However, the interpretation of the
figure is made slightly easier if we square the correlation coefficient, r, to give the
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coefficient of determination, r .
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The coefficient of determination, r , gives the proportion of changes in y that can be
explained by changes in x, assuming a linear relationship between x and y.
For example:
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If a correlation coefficient r = +0.9, then r = 0.81 and we could state that 81% of the
observed changes in y can be explained by the changes in x and that 19% of the
changes must be due to other factors.
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