Question

How to calculate the coefficient of correlation?

Answer 1

Compute the required formula:

The ratio of covariance of two variables and the product of their standard deviations gives Pearson’s correlation coefficient. It is represented by $\mathrm{\rho }\left(\mathrm{rho}\right)$ The Correlation Coefficient value always lies between $-1$ and $+1$.

Formula: $\mathrm{\rho }(\mathrm{X},\mathrm{Y})=\frac{\mathrm{cov}(\mathrm{X},\mathrm{Y})}{{\sigma }_x·{\sigma }_y}$

$\mathrm{\rho }(\mathrm{X},\mathrm{Y})$ is the coefficient of correlation

$\mathrm{cov}(\mathrm{X},\mathrm{Y})$ is the covariance

${\sigma }_x\mathrm{and}{\sigma }_y$ are the standard deviation of X and Y.

Hence, $\mathrm{\rho }(\mathrm{X},\mathrm{Y})=\frac{\mathrm{cov}(\mathrm{X},\mathrm{Y})}{{\sigma }_x·{\sigma }_y}$ is the formula for calculating the coefficient of correlation.