Based on the nature of the relationship between the two variables, correlation can be broadly categorized into the following three types: Positive and Negative Correlation, Linear and Curvilinear Correlation, and Simple and Multiple Correlation.

## Positive and Negative Correlation

A positive correlation between two variables exists when both of them move in the same direction. In other words, if with the increase in one variable, the other also increases, and with the decrease in one variable the opposite also decreases then, the 2 variables are said to be positively correlated. For example, in summers as the temperature rises, the demand for soft drinks rises. Thus, the demand for soft drinks and temperatures are positively correlated.

Two variables are said to be negatively correlated if the two variables move in the opposite direction. In other words, when one variable increases and the other variable falls, the two variables are said to be negatively correlated. For example, in winters as the temperature falls, the demand for room heaters increases. Thus, the demand for room heaters and temperature is negatively correlated.

Also, Read What is Correlation?