Quantitative Gems: The Pearson Correlation Coefficient
Quantitative Analysis (QA) is a type of analysis that uses mathematical and statistical modeling, measurement and research to understand behavior. We have a video series on Quantitative Analysis that walks you through how to build algorithms and interactive charts using Cincom Smalltalk.
The Pearson Correlation Coefficient allows us to quantify the strength of the relationship between two number arrays. What can you do with it?
Test a hypothesis about a numerical relationship.
Create a predictive model.
Find outliers.
Evaluate the reliability of measurement instruments.
Other examples in which you could test correlation include:
Example 1: height vs. weight
Example 2: temperature vs. ice cream sales
Watch this Quant Gem here.