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Week 2 Submissiorn A. What is correlation? Explain correlation measures with appropriate examples Does Correlation imply causality- why or why not? Submission status Submission status No att Not gr Friday 5 days Grading status Due date Time remaining Last modified
21. The file P02_21.xlsx contains monthly interest rates on 30-year fixed-rate mortgages in the United States from 1977 to 2009. The file also contains rates on 15-year fixed-rate mortgages from late 1991 to 2009. What conclusion(s) can you draw from a time series graph of these mortgage rates? Specifically, what has been happening to mortgage rates in general, and how does the behavior of the 30-year rates compare to the behavior of the 15-year rates?
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1. Correlation coefficients are the measurement of association between two(or more) variables. The correlation implies the degree of association or interdependence between variables. If the varables be so related that change in magnitude of one variable results in cjhange in magnitude of other variable ,then they are said to be correlated.

correlation may be linear or non linear.

Linear correlation: If one variable is found to increase (or decreases)on average as the other increases(or decreases),the variable are said to be positively correlated. for example:as height of individual increases their weight also increase and vixec versa..

If one variable is found to increase (or decreases)on average as the other decreases(or increases),the variable are said to be negetively correlated. for example:as a train increases its speed the it required for reaching the destination decreases and vixec versa..

A third situation may arise where the variable are not related is called zero correlation. For example: Height of a student and his score in last exam.

For non linear realtionship we use correlation index.

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2) correlation describes the direction of relationship between two variable.

Causalty means cause and results between two events

Correlation doesnot imply causalty.

for an example the faster the windmill rotates more wind is generated.

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