In: Accounting
How do you interpret the outcome of correlation coefficient R in research analysis?
Correlation coefficient (R) is the result of correlation between variables which indicates that change in value of one variable change the value of other in specific direction.The correlation coefficient is a single number that measures both the strength and direction of linear relationship between two continuous variables.It ranges from -1 to +1.
A coefficient of 0 represents no relationship between between the variables.Where the value is in between 0 and +1/-1 there is relationship between the variables but the points doesn't fall in the linear line.However when the r approaches +1/-1 the relationship increases and points tend to fall closer to a line.
Positive coefficients indicates when the value of one variable increases the value of other variables also tends to increase whereas Negative coefficients indicates when the value of one variable increases tends to decrease.
Positive relationships produces upward slope whereas Negative relationships produces a downward slope.