A sales manager noticed that the annual sales of his employees increase with years of experience. To estimate the annual sales for his potential new sales person he collected data concerning annual sales and years of experience of his current employees: Use his data to Years of experience 1 3 8 10 13 Annual sales in thousands 8 10 11 12 14 Plot a scatter diagram Fit a regression line using his data to help him estimate annual sales based on years of experience. Interpret the calculated intercept and slope? Calculate estimate annual sales based on 18 years of experience? Can we calculate correlation coefficient for the same set of data, Why or Why NOT?
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
- A sales manager noticed that the annual sales of his employees increase with years of experience. To estimate the annual sales for his potential new sales person he collected data concerning annual sales and years of experience of his current employees: Use his data to
|
Years of experience |
1 |
3 |
8 |
10 |
13 |
|
Annual sales in thousands |
8 |
10 |
11 |
12 |
14 |
- Plot a
scatter diagram
- Fit a regression line using his data to help him estimate annual sales based on years of experience.
- Interpret the calculated intercept and slope?
- Calculate estimate annual sales based on 18 years of experience?
- Can we calculate
correlation coefficient for the same set of data, Why or Why NOT?
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