Question

You have a series of X consisting of the following values (3,6,7,10,15,25) and a series Y consisting of the following values (4,4,6,10,10,14)

What is the covariance of X and Y? What is the correlation between X and Y? Intrepret it.

Answer 1

Following table shows the calculations:

	X	Y	(X-xmean)^2	(Y-ymean)^2	(x-xmean)*(y-ymean)
	3	4	64	16	32
	6	4	25	16	20
	7	6	16	4	8
	10	10	1	4	-2
	15	10	16	4	8
	25	14	196	36	84
Total	66	48	318	80	150

Mean:

The co-variance of the data:

The variance is:

The correlation coefficient is

It shows that relationship between the variables is strong and positive.