Types of Correlation

Correlation is a statistical tool that measures the quantitative relationship between different variables. It studies the degree and intensity of the connection between the two variables. The relationship between two variables is studied with the help of a statistical tool i.e. â€˜Correlationâ€™. Types of Correlation are

Types of Correlation

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
• 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.

Linear and Curvilinear correlation

If the ratio for change between the two variables is constant or fixed, then the 2 variables are said to be linearly correlated.

As against, linear correlation, if the ratio of change between the two variables is not constant, then the two variables are said to be curvilinearly correlated.

Simple and Multiple correlation

The study of the relationship between only two variables is known as a simple correlation. For example, the relationship between price and demand.

The study of relationships among three or more than three variables simultaneously is called multiple correlations. For example, the study of the relationship between price, demand, tastes, and income of the consumers.