16.5 - Covariance vs Correlation
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Practice Questions
Test your understanding with targeted questions
What does a positive covariance indicate?
💡 Hint: Think about how two variables can move together.
Is correlation a dimensionless value?
💡 Hint: Consider the range of correlation values.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the range of values of correlation?
💡 Hint: Think about how correlation is measured and the meaning of its extremes.
True or False: Covariance can be a negative number.
💡 Hint: Recall how covariance describes variable interactions.
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Challenge Problems
Push your limits with advanced challenges
A dataset comprises the following observations for two variables: A = {10, 20, 30, 40} and B = {5, 10, 15, 20}. Calculate the covariance and the correlation between A and B.
💡 Hint: Apply the covariance and correlation formulas carefully, ensuring to calculate means first.
How might covariance apply differently when analyzing stock returns of two companies versus analyzing temperature variation and ice cream sales?
💡 Hint: Reflect on real-life implications of variable relationships.
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