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Statistical techniques

4.2 Using correlation

Activity level Cost

2
2
x y x xy y
Quarter 1 10 38.3 100 383 1,466.89
Quarter 2 12 42.7 144 512.4 1,823.29
Quarter 3 9 35.7 81 321.3 1,274.49

Quarter 4 14 47.2 196 660.8 2,227.84
–––– –––– –––– –––––– –––––––

45 163.9 521 1,877.5 6,792.51
–––– –––– –––– –––––– –––––––

(4 × 1,877.5) – (45 × 163.9) 134.5

r = ——————————————————— = ——– = 1
2
2
√ ((4 × 521) − 45 )((4 × 6,792.51) – 163.9 ) 134.5
This suggests perfect positive correlation.

Illustrations and further practice

Now try TYU question 4 and 5 from Chapter 12.

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