Test: Correlation - Commerce MCQ

The sign of covariance between X and Y determines the sign of the correlation coefficient. The value of r does not contain any unit.

Y = a + bX, in linear equation, the intercept term is denoted by a. It is the point at which this line intersect at y-axis.

The value of coefficient of correlation is unaffected by change of origin. Correlation coeffecient always remains between -1 and +1.

Correlation always studies the relation between two variables. It measures co-variation and not causation.

The value of correlation coefficient lies between minus one and plus one. If in any exercise, the value of r is outside this particular range, it definitely indicates an error in calculation.

Scatter diagram is a simple visual method for getting some idea about correlation between two variables. A scatter diagram displaying plotted points on an upward sloping straight line denotes a perfect positive correlation between X and Y.

The value of coefficient correlation remains unaffected by the change in origin and change in scale.

Statistical series in which variables are not capable of quantitative measurement, the correlation can be measured by Spearman’s rank correlation. It includes qualitative characterstics like, honesty, beauty etc.

The value of coefficient correlation remains unaffected by the change in origin and change in scale.

Correlation coefficient is denoted by r. If the two variables X and Y move in the same direction they are said to have positive relationship.