The following are the major properties of correlation coefficient:
- Correlation ‘r’ has no unit, it is a pure number. It means units of measurement are not part of ‘r’.
- A negative value of ‘r’ indicates an inverse relation. A change in one variable is associated with change in the other variable in the opposite direction. For instance, when price of tomato increases, its demand decreases.
- If ‘r’ is positive the two variables move in the same direction. When the price of coffee rises, a substitute of tea, the demand for tea increases.
- The value of the correlation coefficient **** between minus one and plus one. (-1 ≤ r ≤ 1).
- If r = 0, the two variables are uncorrelated. There is no linear relation between them. However, other types of relations may be there.
- If r =1 or r = -1, the correlation is perfect. The relation between them is exact.
- A low value of ‘r’ indicates a weak linear relation. Its value is said to be low when it is close to zero.
- The magnitude of ‘r’ is unaffected by the change of origin and change of scale.
