Negative correlations, and correlations more generally, are important because they improve our ability to estimate and predict things. Why? Because higher values of the good on the y-axis are associated with lower values of the good on the x-axis, and lower values of the good on the y-axis are associated with higher values of the good on the x-axis. When two variables are negatively correlated, the plotted points will be clustered around a downward sloping line. A scatter plot is a graph that plots the value of one variable measured along the y-axis in relation to values of another variable measured along the x-axis.
Correlation does not imply causation! A correlation simply establishes an observable association between two variables.Ī great way to visualize correlations is with a scatter plot. Remember, just because two things are correlated does not mean that one causes the other. People crave more hot chocolate and less ice cream when temperatures are low, and people crave more ice cream and less hot chocolate when temperatures are high. The temperature has a causal effect on the sale of both items. Instead, a third factor, temperature, is responsible for the negative correlation. In the case of ice cream and hot chocolate sales, however, nothing about selling ice cream causes the sale of hot chocolate to fall. The prevalence of COVID makes people less inclined to book a flight. In the negative correlation between Covid cases and air travel, the number of COVID cases has a causal effect on air travel.
It could even be that the correlation occurs by chance and not because of any causal factors.Ĭonsider two of the examples from above. While this could be the case, it could also be the case that some third variable explains the correlation. Hours spent NOT studying for an exam and performance on an examĪ negative correlation does not imply that one variable causes a change in the other. When two variables are negatively correlated, a higher value of one is associated with a lower value of the other and vice versa.Įxamples of Negatively Correlated Variables Negative Correlation, Positive Correlation and Zero CorrelationĪ negative correlation - also known as an inverse correlation - describes a relationship between two variables that tend to move in opposite directions.
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