Cheat Sheet

# Cheat Sheet - Response and Explanatory Variables Response...

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Response and Explanatory Variables Response variable : the variable of interest (measures the outcome of a study); also called dependent variable . Explanatory variable : a variable that explains or causes changes in the response variable; also called independent variable . E.g., the sale (response) and advertising (explanatory) Scatterplot Positive association: above-average values of one variable accompany above-average values of the other, and below-average values also tend to occur together Negative association: above-average values of one variable accompany below-average Correlation (r) Measures the direction and “strength of the linear relationship ” between two quantitative variables Is always between -1 and 1; the strength increases as you move away from 0 to either –1 or 1 Definition of Correlation r = 1 n - 1 x 1 - x s x y 1 - y s y i =1 n that is, • standardize each xi and yi • multiply • “average” (sum up and divide by n -1) Notes about Correlation r makes no distinction between explanatory and response variables. It does not matter which variable you call X and which you call Y. • Both variables have to be quantitative. r does not change if you change the units of measurement. Notes about Correlation r > 0 indicates positive association between the variables, and r < 0 indicates negative association. r is always between –1 and 1; the strength increases as you move away from 0 to either –1 or 1. Extremes r = -1 and r =1 occur if and only if the points on a scatterplot lie exactly along a straight line. r

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## This note was uploaded on 05/01/2008 for the course BUAD 310 taught by Professor Lv during the Spring '07 term at USC.

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Cheat Sheet - Response and Explanatory Variables Response...

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