Correlation, and Level of Significance-ECO6416

Correlation, and Level of Significance-ECO6416 - F= (n-2) r...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Correlation, and Level of Significance It is intuitive that with very few data points, a high correlation may not be statistically significant. You may see statements such as, “correlation is significant between x and y at the α = 0.005 level" and “correlation is significant at the α = 0.05 level." The question is: how do you determine these numbers? Using the simple correlation r, the formula for F-statistic is:
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: F= (n-2) r 2 / (1-r 2 ), where n is at least 2. As you see, F statistic is monotonic function with respect to both: r 2 , and the sample size n. Notice that the test for the statistical significance of a correlation coefficient requires that the two variables be distributed as a bivariate normal....
View Full Document

Ask a homework question - tutors are online