Perfect correlation
Topic: Economic Data: Census, NSS, Surveys and Statistical Tools · NCERT: Class 11, Ch 6 "Correlation"
Meaning
Perfect correlation means every point on the scatter diagram (a graph of paired values) lies exactly on one straight line. One variable then changes in an exactly fixed proportion to the other. Karl Pearson's r equals +1 for perfect positive correlation, where the variables move in the same direction. It equals −1 for perfect negative correlation, where they move oppositely. These are the upper and lower limits of r. Real economic data seldom reach them.
Example
If a worker is paid Rs 500 a day, total wages rise exactly in step with days worked, so r = +1. NCERT's price index compared with money supply gives r = 0.98. That is very close to perfect but not exactly perfect.
Don't confuse with
- Causation: even perfect correlation does not show which variable causes the other, or whether a third factor drives both.
Related concepts
- Measures of central tendency
- Arithmetic mean
- Weighted arithmetic mean
- Median
- Quartiles
- Decile
- Percentiles
- Mode
- Bimodal and multimodal distribution
- Modal class