document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1114067>Question 1114067</A>: <I><SPAN STYLE=\"word-break: break-all;\"> How strong is the correlation between the inflation rate and 30-year treasury yields? The following data published by Fuji Securities are given as pairs of inflation rates and treasury yields for selected years over a 35-year period.\r<BR>\n" );
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document.write( "Inflation rate (%)	30-year treasury yield (%)<BR>\n" );
document.write( "1.57	3.05<BR>\n" );
document.write( "2.23	3.93<BR>\n" );
document.write( "2.17	4.68<BR>\n" );
document.write( "4.53	6.57<BR>\n" );
document.write( "7.25	8.27<BR>\n" );
document.write( "9.25	12.01<BR>\n" );
document.write( "5.00	10.27<BR>\n" );
document.write( "4.62	8.45<BR>\n" );
document.write( "Compute the Pearson product—moment correlation coefficient to determine the strength of the correlation between these two variables. Comment on the strength and direction of the correlation.\r<BR>\n" );
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document.write( "Keep 2 decimal places.\r<BR>\n" );
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document.write( "r =\r<BR>\n" );
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document.write( "There is a strong\r<BR>\n" );
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document.write( " relationship between the inflation rate and the thirty-year treasury yield. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #729082 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=729082\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the following reference provides you with the scatter plot.\r<BR>\n" );
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document.write( "<a  rel=nofollow HREF= \"http://www.alcula.com/calculators/statistics/scatter-plot/\" target = \"_blank\">http://www.alcula.com/calculators/statistics/scatter-plot/</a>\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2018/040601.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "the following reference provides you with the correlation coefficient.\r<BR>\n" );
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document.write( "<a  rel=nofollow HREF= \"http://www.alcula.com/calculators/statistics/correlation-coefficient/\" target= \"_blank\">http://www.alcula.com/calculators/statistics/correlation-coefficient/</a>\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2018/040602.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "the following reference provides you with the linear regression.\r<BR>\n" );
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document.write( "<a href  \"http://www.alcula.com/calculators/statistics/linear-regression/\" target = \"_blank\">http://www.alcula.com/calculators/statistics/linear-regression/</a>\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2018/040603.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "your correlation coefficient, which is R, is .90, which indicates there is a strong positive correlation between inflation rate and 30 year treasury yield.\r<BR>\n" );
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document.write( "your correlation coefficient squared, which is R^2, is .81.<BR>\n" );
document.write( "this indicates that a fairly high percentage of the variation in the data can be explained by the model, as opposed to other reasons.\r<BR>\n" );
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document.write( "here's a reference:\r<BR>\n" );
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document.write( "<a  rel=nofollow HREF= \"http://blog.minitab.com/blog/adventures-in-statistics-2/regression-analysis-how-do-i-interpret-r-squared-and-assess-the-goodness-of-fit\" target = \"_blank\">http://blog.minitab.com/blog/adventures-in-statistics-2/regression-analysis-how-do-i-interpret-r-squared-and-assess-the-goodness-of-fit</a>\r<BR>\n" );
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document.write( "you can find R squared by simply squaring R.\r<BR>\n" );
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document.write( "without knowing anything else, you can't really find R by taking the square root of R^2, because R indicates direction of fit, which is lost when you square it.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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