Fraud and Fraud Detection: A Data Analytics Approach, + Website

CHAPTER 6 Advanced Data Analytical Tests

WHILE CORRELATION, TREND ANALYSIS, and times series analyses are considered advanced statistical methods, they are easy to apply within IDEA. These tests are explained and demonstrated in IDEA. Tests to establish relationships between two fields have their procedures shown step by step in this chapter. These advanced data analytical tests are grouped together as they all establish some form of relationship testing.

CORRELATION

A correlation is a relationship between two things or mathematical variables that tend to vary or move together. The data is represented by the letters x and y where x is the independent variable and y is the dependent variable. The independent variable x is usually described first. There is usually some logical connection between the two variables.

Many studies have been done on income levels of high school graduates, college, and university graduates and those with post-graduate degrees. The question in those studies is whether there is a connection or correlation between educational levels and income levels. Educational level would be x, the independent variable that would influence the income level variable of y, the dependent variable.

How much does the independent variable have influence over the dependent variable can be determined by calculating the correlation coefficient and is designated as r. A perfect ...