In: Statistics and Probability
What is different about what the sign of a correlation (negative or positive) tells us vs. the magnitude of the correlation coefficient (i.e. how much r is greater than or less than zero)?
Solution:
We know that, Positive correlation is a relationship between two variables in which both variables moves in same direction.
Whereas, Negative correlation (Inverse correlation) is a relationship between two variables in which both variables moves in opposite direction.
The range of values for the correlation coefficient (r) is -1.0 & 1.0
In other words, the values cannot exceed 1.0 or be less than -1.0 whereby a correlation of -1.0 indicates a perfect negative correlation, and a correlation of 1.0 indicates a perfect positive correlation. Correlation coefficient (r), is greater than zero, it's a positive relationship.
Similarly, when correlation coefficient (r) is less than zero, it's a negative relationship. A value of zero indicates that there is no relationship between the two variables.
A positive correlation, when the correlation coefficient (r) is greater than 0, signifies that both variables move in the same direction or are correlated.
A negative correlation occurs when the correlation coefficient (r) is less than 0 and indicates that both variables move in the opposite direction.
This is the difference between the sign of correlation vs the magnitude of correlation coefficient.