YEAR Sales(Millions Euro) Advertising(Million Euro) 1 651 23 2 762 26 3 856 30 4 1063 34 5 1190 43 6 1298 48 7 1421 52 8 1440 57 9 1518 58 a) Calculate the Pearson Product moment correlation coefficient for this set of data. b) Fit a simple linear regression model for the following data taking sales (million euro) as predictand variable. c) Interpret what does regression coefficient indicates in the above model.
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.
|
YEAR |
Sales(Millions Euro) | Advertising(Million Euro) |
| 1 | 651 | 23 |
| 2 | 762 | 26 |
| 3 | 856 | 30 |
| 4 | 1063 | 34 |
| 5 | 1190 | 43 |
| 6 | 1298 | 48 |
| 7 | 1421 | 52 |
| 8 | 1440 | 57 |
| 9 | 1518 | 58 |
- a) Calculate the Pearson Product moment
correlation coefficient for this set of data. - b) Fit a simple linear regression model for the following data taking sales (million euro) as predictand variable.
- c) Interpret what does regression coefficient indicates in the above model.
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