National open university of nigeria introduction to econometrics II eco 356

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Introduction to Econometrics ECO 356 Course Guide and Course Material
Introduction to Econometrics ECO 356 Course Guide and Course Material

Figures a) to (d);

INTRODUCTION TO ECONOMETRICS II

ECO 306

NOUN
36 downward-sloping straight line. A value of 0 indicates that there is no association between the observations on X and Y in the sample. Of course the fact that r = 0 does not necessarily imply that ρ = 0 or vice versa. That is
1
( , ) 1
( , )
1

( , )
1

( , )
0

corr X Y
corr X Y
means perfect positive linear association
corr X Y
means perfect negative linear association
corr X Y
means no linear association
 


 Figures a) to (d) below give more graphical explanations

Figures a) to (d);Scattered diagrams of correlation coefficient as a measure of
linear association
Example: For illustration, using the education and earning example, the sample correlation coefficient can be estimated. This is shown below

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