Question

Describe the assumptions for correlation Prove that correlation coefficient is independent

of change of origin and scale both.

15 Dec 2017
Answer :
Word Count : 463

1. Assumptions for Correlation:
   Correlation is a statistical measure that quantifies the strength and direction of the linear relationship between two variables. Several assumptions are important when dealing with correlation:

   a. Linearity: The relationship between the two variables should be approximately linear. Correlation is primarily designed to measure linear associations, so if the relationship is nonlinear, correlation may not accurately reflect the association.

   b. Independence: The observations of the two variables should be independent of each other. In other words, the value of one variable should not depend on the value of the other. Violation of this assumption can lead to spurious correlations.

   c. Homoscedasticity: The variances of the two variables should be roughly constant across different values of the variables. In cases of heteroscedasticity (varying variances), correlation may be affected.

   d. Outliers: Extreme values or outliers can unduly influence the correlation

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