In statistics, it’s frequent that we come across these two terms referred to as covariance and correlation. The 2 terms are often used interchangeably. These two ideas are similar, but not an equivalent . Both are wont to determine the linear relationship and measure the dependency between two random variables.
Despite the similarities between these mathematical terms, they’re different from one another .
Covariance is when two variables vary with one another , whereas Correlation is when the change in one variable leads to the change in another variable.
Covariance signifies the direction of the linear relationship between the 2 variables. By direction we mean if the variables are directly proportional or inversely proportional to every other. (Increasing the worth of 1 variable may need a positive or a negative impact on the worth of the opposite variable).
The values of covariance are often any number between the 2 opposite infinities. Also, it’s important to say that covariance only measures how two variables change together, not the dependency of 1 variable on another one.
Correlation analysis may be a method of statistical evaluation wont to study the strength of a relationship between two, numerically measured, continuous variables.
It not only shows the type of relation (in terms of direction) but also how strong the connection is. Thus, we will say the correlation values have standardized notions, whereas the covariance values aren’t standardized and can’t be wont to compare how strong or weak the connection is because the magnitude has no direct significance. It can assume values from -1 to +1.
Covariance and correlation are associated with one another , within the sense that covariance determines the sort of interaction between two variables, while correlation determines the direction also because the strength of the connection between two variables.