It is very easy to calculate correlation coefficient r in Excel. Higher the absolute value of ‘r’, stronger the correlation between ‘Y’ & ‘X‘.It can range from -1.0 to +1.0, A positive correlation coefficient indicates a positive relationship, a negative coefficient indicates an inverse relationship.‘r’ indicates the extent to which two variables are related.Because it was originally proposed by Karl Pearson, it is also known as the Pearson correlation coefficient. It indicates the degree to which variation in X, is related to the variation in Y. In situations like these, correlation coefficient r, is the most widely used statistic, summarizing the association between two continuous variables X and Y. – Is there an association between market share and size of the sales force?. – How strongly are sales related to advertising expenditures?.In marketing research we are often interested in knowing the strength of association between two continuous variables, as in the following situations: Let us understand Correlation Coefficient, now we will call it or know it by ‘r’. How to measure Correlation/How much is the Correlation But we can calculate the strength of relationship by calculating correlation coefficient. While scatter diagram shows the graphical representation, it doesn’t tell us the strength of relationship between the two variable. So the next step from scatter diagram is correlation. Correlation is explained here with examples and how to calculate correlation coefficient (also known as Pearson correlation coefficient). Correlation is the strength of association between two continuous variables.
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