Some important questions with answers on the concept of correlation are given, which are drafted by expert commerce teachers from the latest version of CBSE (NCERT) books.

**Important Questions â€“ Correlation**

Â **Question 1**

**Define correlation.**

Â **Answer:**

Â Correlation is a statistical method or a technique that measures a quantitative relationship between different variables, such as demand and price.

Â **Question 2**

Â **Define partial correlation.**

Â **Answer:**

Â If more than two variables are involved and the relationship between only two variables is suited for treating other variables as constants, then it is known as a partial correlation.

Â **Question 3**

Â **Define the line of best fit.**

**Â Answer:**

Â The line of best fit is one that passes through the scattered points such that it represents most of these points. Roughly, half of the scattered points should be on either side.

Â **Question 4**

**Â Explain the principal methods for calculating the coefficient of correlation.**

**Â Answer:**

Â The principal methods for calculating the coefficient of correlation are:

- Scatter diagram method
- Karl Personâ€™s coefficient of correlation
- Spearmanâ€™s rank correlation coefficient.

Â **Question 5**

**Â What is the difference between negative and positive correlations?**

**Answer:**

The difference between negative and positive correlations is that variables move in the same direction in a positive correlation, whereas they move in the opposite directions in a negative correlation.

**Question 6**

**What is the nature of the correlation of two variables when they move in the same direction?**

**Answer:**

When two variables move in the same direction, the correlation is positive.

**Question 7**

**The coefficient of correlation is between -1 and +1. Express it arithmetically.**

**Answer:**

When the coefficient of correlation is -1, it is perfect negative, and when it is +1, it is perfect positive.

**Question 8**

**When is the rank correlation method used?**

**Answer:**

The rank correlation method is used when the variables are qualitative, such as bravery, beauty, virtue, wisdom, etc.

**Question 9**

**What is a simple correlation?**

**Answer:**

A simple correlation implies the study of a relationship between only two variables.

**Question 10**

**What is a multiple correlation?**

**Answer:**

When the relation between three or more variables is studied simultaneously, it is known as a multiple correlation.

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*Also Check:Â Statistics MCQs*

Very easy answer thank you

Nice Byjus