Product Moment Coefficient Correlation

Product moment coefficient correlation is a statistical measure that helps to determine the relationship between two variables. It is also known as Pearson's correlation coefficient.

Ratio of Covariance to the Product of Standard Deviations

The product moment coefficient correlation may be defined as the ratio of covariance to the product of the standard deviations of two variables. This ratio ranges from -1 to +1.

Positive Correlation

If the ratio is positive, it indicates that there is a positive correlation between the two variables. This means that as one variable increases, the other variable also tends to increase.

Negative Correlation

If the ratio is negative, it indicates that there is a negative correlation between the two variables. This means that as one variable increases, the other variable tends to decrease.

No Correlation

If the ratio is zero, it indicates that there is no correlation between the two variables.

Uses of Product Moment Coefficient Correlation

Product moment coefficient correlation is widely used in various fields to determine the relationship between two variables. Some of the common uses of this statistical measure are:

- In finance, it is used to determine the correlation between two stocks or securities.
- In marketing, it is used to determine the correlation between advertising spending and sales.
- In healthcare, it is used to determine the correlation between a patient's age and their blood pressure.
- In psychology, it is used to determine the correlation between a student's study time and their grades.

Conclusion

In conclusion, product moment coefficient correlation is a widely used statistical measure that helps to determine the relationship between two variables. It is defined as the ratio of covariance to the product of standard deviations and ranges from -1 to +1. It is used in various fields such as finance, marketing, healthcare, and psychology.