**Covariance**

Covariance is a measure of the joint

variability of two variables.

• A positive covariance means

that the two variables move

together.

• A covariance of 0 means that

the two variables are

independent.

• A negative covariance

means that the two

variables move in opposite

directions.

Covariance can take on values from

-∞ to +∞ . This is a problem as it

is very hard to put such numbers

into perspective.

Sample covariance formula:

In Excel,

the covariance is calculated by:

** **

Sample covariance:

=COVARIANCE.S()

Population covariance:

=COVARIANCE.P()

**Correlation**

Correlation is a measure

of the joint variability of

two variables. Unlike covariance, correlation could be

thought of as a standardized

measure. It takes on values between

-1 and 1, thus it is easy for us to

interpret the result.

** **

•

A

correlation of 1, known as perfect positive correlation, means that one variable is perfectly explained by the other.

•

A correlation of 0 means

that the variables are independent.

•

A correlation of -1, known as

perfect negative correlation,

means that one variable is explaining the other one perfectly, but they move in opposite

directions.

In Excel, correlation is calculated by:

=CORREL()

1- Types of data and level of measurement
2- Graphs and Tables that Represent Categorical Variables
3- Excel formulas
4- Graphs and tables that represent numerical variables
5- Graphs and Tables for Relationships Between Variables.
6- Mean, Median, Mode
7- Variance and Standard Deviation
8- Covariance and Correlation
9- Distributions
10- The Central Limit Theorem
11- Estimators and Estimates
12- Confidence Intervals and the Margin of Error
13- Student’s T Distribution
14- Formulas for Confidence Intervals
15- Scientific method
16- Hypotheses
17- Decisions You Can Take
18- Statistical Errors (Type I Error and Type II Error)
19- P-Value
20- Formulae for Hypothesis Testing
21- Basics
22- Linear regression equation
23- How to do linear regression in Excel with Analysis ToolPak
24- Interpret regression analysis output
25- How to make a linear regression graph in Excel
26- How to do regression in Excel using formulas