If the covariance between X and Y is positive, what does it generally indicate?
Correct answer: A. The variables tend to move in the same direction
- A. The variables tend to move in the same direction
- B. The variables have identical numerical values
- C. The variables have no measurable variation
- D. The variables always have a curved relationship
Explanation
Positive covariance means that observations above their respective means tend to occur together, as do observations below their means. It does not mean that the two variables have equal values or that the relationship is necessarily perfect.
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About Correlation and Regression
Correlation describes the direction and strength of association between two variables using scatter diagrams and correlation coefficients. Regression covers fitted lines, regression equations, prediction and least squares, with a clear distinction between association and causation and between estimating a response value and reversing the roles of the variables.
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