16.2. Interpretation of Covariance

Try these first

1. 1.

   Define covariance in your own words.

   Hint

   Think about how one variable can affect another.

2. 2.

   What does a positive covariance indicate?

   Hint

   Consider the directions of change for both variables.

3. 3.

   What is covariance?

   • A measure of strength
   • A measure of variability
   • A measure of central tendency

   Hint

   Focus on the relationship aspect.

4. 4.

   True or False: A covariance of zero indicates a strong negative relationship.

   • True
   • False

   Hint

   Think about what zero means.

5. 5.

   Given two data sets, compute covariance and then describe what it indicates about their relationship: X = {3, 5, 7, 9} and Y = {12, 15, 18, 22}.

   Hint

   Calculate means first to understand the changes.

6. 6.

   You observe a dataset with positive covariance in temperature and ice cream sales. How might this information be strategically utilized by a business?

   Hint

   Consider seasonality and marketing strategies.