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Correlation Coefficient Computation of Sales, Costs and GNP

What is the correlation coefficient between Irwin's sales and costs and between sales and GNP growth?
Year GNP Growth Sales Costs
1990 2.0% $105,400 $71,000
1991 1.5 101,900 72,200
1992 -2.0 100,400 72,300
1993 -1.0 102,200 72,500
1994 0.5 104,000 72,000
1995 -1.0 99,950 71,300
1996 1.0 103,300 72,300
1997 2.0 102,800 72,100
1998 2.5 104,900 72,300
1999 0.0 100,100 72,500
2000 2.0 104,600 71,200
2001 1.5 102,000 71,730
2002 3.0 103,300 70,600

Solution Preview

Using Spreadsheet software:
Pearson r correlation= =PEARSON(D3:D15,E3:E15) ---> this is the formula
Pearson r correlation= -0.3348
Note: The formula is embedded in the attached Spreadsheet file.

How to interpret:
1. Use the Pearson r table.
2. Select .05 level of significance.
3. Find the degrees of freedom. This can be obtained by df-2. Since the ...

Solution Summary

The solution computes and interprets the result of the correlation coefficient between Irwin's sales and costs and between sales and GNP growth. A spreadsheet formula was used to solve the problem.

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