: Correlation Regression

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A scatter diagram is a graphic picture of the sample data. Suppose a random sample of n pairs of observations has the values (x1,y1),(x2,y2),(x3,y3), ,(xn,yn). These points are plotted on a rectangular co-ordinate system putting the independent variable on the x-axis and the dependent variable on the y-axis. No matter what the independent variable is, it must be placed on the x- axis. Suppose the plotted points are as shown in figure (a). Such a diagram is called a scatter diagram. In this figure, we see that when x has a small value y is also small, and when x has a large value. This is called a direct or positive relationship between x and y. The plotted points cluster around a straight line. It appears that if a straight line is drawn passing through the points, the line will be a good approximation to represent the original data. Suppose we draw a line ab to represent the scattered points.

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