Negative correlation

Indian Economy glossary

Also called: Inverse relation · Topic: Economic Data: Census, NSS, Surveys and Statistical Tools · NCERT: Class 11, Ch 6 "Correlation"

Meaning

Negative correlation, or an inverse relation, means two variables move in opposite directions. When one rises, the other tends to fall. In Karl Pearson's coefficient, it shows up as a value of r below zero, down to −1. The closer r is to −1, the stronger the inverse link. On a scatter diagram (a graph of paired values), the points slope downward from left to right.

Example

When the price of apples rises, the quantity people demand falls. In a mandi, when large quantities of vegetables arrive, their price drops.

Don't confuse with

  • Causation: a negative correlation shows only that the variables move oppositely. It does not prove that one causes the other.
  • Zero correlation: r = 0 means no straight-line relation at all, not an inverse one.

Related concepts

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