a. Develop a scatter diagram with the number of cars in service as the independent variable. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables? b. Develop and interprete the estimated regression equation C. Does the above data provide a good model fit for the estimate regression equation?
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.
Given : We have given that the data of number of cars in service (1000s) and the annual revenue ($millions) for six smaller car rental companies .
a) To plot scatter diagram for given data cars as independent variable ,
.
Interpretation : There is positive relationship between number of cars and revenue.
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