correlation analysis: can we explain the link between 2 variables?
TRANSCRIPT
Football? Goals Scored and Points
Score More Goals Get More Points
Points depend on Goals
Buy a World-Class Striker Win the Premier League
Premier League April 26, 2015
Man City Should be Top
Correlation Analysis of Goals Scored and Points
20 30 40 50 60 70 800
10
20
30
40
50
60
70
80
90
Chelsea
Man City
WBA
QPR
Goals Scored
Poin
ts
Correlation = 0.93
20 30 40 50 60 70 800
10
20
30
40
50
60
70
80
90
Chelsea
Man City
WBA
QPR
Goals Scored
Poin
ts
Other Variables are Important:Goals Against
Hours Studied and Grades Hours Worked and Take-Home Pay
Car Engine Size and Emissions Car Engine Size and Speed
Births and Population Size Births and Stork Population
Other Real World Examples:
Stork Population and Births
Correlation = 0.85
Outlier and Spurious Results
Outlier
If it looks statistically true…
… but is false in reality
… we could take incorrect conclusions
... and make costly and inappropriate decisions.
Correlation Does Not Mean Causality
Elephants caused Desertification: 1970s Culling of Elephants in Zimbabwe resulting in 40,000 elephants being killed over a 14 year period.
Cats caused the Black Death: 1665 England where cats were blamed for hosting fleas and were almost eradicated.
Ice Cream caused Polio: 1950s America where children were warned not to eat ice cream in the summer or they could be crippled.
Costly Mistakes Made Due to Spurious Results
Frank Conway
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Thank You