SOLUTION: 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 trea

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Question 1114067: 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.
Inflation rate (%) 30-year treasury yield (%)
1.57 3.05
2.23 3.93
2.17 4.68
4.53 6.57
7.25 8.27
9.25 12.01
5.00 10.27
4.62 8.45
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.
Keep 2 decimal places.
r =

There is a strong
relationship between the inflation rate and the thirty-year treasury yield.
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
the following reference provides you with the scatter plot.

http://www.alcula.com/calculators/statistics/scatter-plot/

the following reference provides you with the correlation coefficient.

http://www.alcula.com/calculators/statistics/correlation-coefficient/

the following reference provides you with the linear regression.

http://www.alcula.com/calculators/statistics/linear-regression/

your correlation coefficient, which is R, is .90, which indicates there is a strong positive correlation between inflation rate and 30 year treasury yield.

your correlation coefficient squared, which is R^2, is .81.
this indicates that a fairly high percentage of the variation in the data can be explained by the model, as opposed to other reasons.

here's a reference:

http://blog.minitab.com/blog/adventures-in-statistics-2/regression-analysis-how-do-i-interpret-r-squared-and-assess-the-goodness-of-fit

you can find R squared by simply squaring R.

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.