Correlation Coefficient (r)

Definition

The correlation coefficient, denoted as "r", measures the strength and direction of the linear relationship between two variables. It ranges from -1 to 1, where -1 indicates a perfect negative linear relationship, 0 indicates no linear relationship, and 1 indicates a perfect positive linear relationship.

Analogy

Think of the correlation coefficient as a compass that tells you how closely two variables are moving together. If r is close to 1 or -1, it's like the compass pointing strongly in one direction, indicating a strong linear relationship. If r is close to 0, it's like the compass spinning randomly, suggesting no clear linear relationship.

Related terms

Scatterplot: A graph that displays the relationship between two quantitative variables by plotting points on a coordinate plane.

Outliers: Data points that are significantly different from other data points in a dataset and may have an impact on the correlation coefficient.

Causation: The idea that changes in one variable directly cause changes in another variable.