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Key Business Analytics by Bernard Marr

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3

Correlation analysis

What is it?

Correlation analysis is a statistical technique that allows you to determine whether there is a relationship between two separate variables and how strong that relationship may be.

This type of analysis is only appropriate if the data is quantified and represented by a number. It can’t be used for categorical data, such as gender, brands purchased, or colour.

The analysis produces a single number between +1 and −1 that describes the degree of relationship between two variables. If the result is positive then the two variables are positively correlated to each other, i.e. when one is high, the other one tends to be high too. If the result is negative then the two variables are negatively correlated to each ...

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