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Chapter 12

Pearson’s correlation coefficient, denoted r, is defined as:

n∑xy – ∑x∑y
r = ——————————————
√( n∑x – (∑x) )(n∑y –(∑y) )
2
2
2
2
r always lies in the range –1 to +1, where:

r = +1 denotes perfect positive linear correlation

r = –1 denotes perfect negative linear correlation

r = 0 denotes no linear correlation

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