Since 1985, average mortgage interest rates have fluctuated from a low of 4.25% to a high of 14%. Is there a relationship between the amount of money people borrow and the interest rate that’s offered? Below is a scatterplot of Mortgage Loan Amounts in the US (in thousands of dollars) versus Interest Rate (in percent) at various times over the past 26 years. Which is the response variable and which is the explanatory variable? Suppose the linear regression model for this data is ? ̂ = 189.674 − 42.235?. Interpret the slope in the context of this scenario.
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.
Since 1985, average mortgage interest rates have fluctuated from a low of 4.25% to a high of 14%. Is there a relationship between the amount of money people borrow and the interest rate that’s offered? Below is a scatterplot of Mortgage Loan Amounts in the US (in thousands of dollars) versus Interest Rate (in percent) at various times over the past 26 years.
Which is the response variable and which is the explanatory variable?
Suppose the linear regression model for this data is ? ̂ = 189.674 − 42.235?. Interpret the slope in the context of this scenario.
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