Question

Please provide several examples of a negative correlation coefficient.

Answer 1

A negative correlation occurs when the correlation coefficient is less than 0 and indicates that both variables move in the opposite direction. If the correlation coefficient between 0 and -1 means that the two securities move in opposite directions. When ρ is -1, the relationship is said to be perfectly negatively correlated. In short, if one variable increases, the other variable decreases with the same magnitude, and vice versa.

Examples:-

1. If the temperature increases outside, the amount of snowfall decreases.

2. If the speed of a car decreases, travel time to a destination increases.

3. If the weather gets colder, air conditioning costs decrease.

4. As a bikers speed increases, his time to get to the finish line decreases.

5. As the sun shines more, a house with solar panels requires less use of other electricity.

6. A study is conducted to assess the relationship between outside temperature and heating bills and there is a negative correlation between the prices of heating bills and the outdoor temperature. That means as the temperature decreases outside, the prices of heating bills increase and vice versa.