Understanding Correlation and Causation

What is the range of values that correlation can take?

• 0 to 2

• -1 to 1

• 0 to 1

• -2 to 2

Which method is most commonly used to calculate correlation?

• Fisher's

• Pearson's

• Kendall's

• Spearman's

What type of correlation is shown when temperature increases and ice cream sales also increase?

• Negative correlation

• No correlation

• Positive correlation

• Inverse correlation

In a scatterplot, what indicates a strong correlation between two variables?

• Dots are scattered randomly

• Dots form a clear pattern

• Dots are far apart

• Dots are in a circular pattern

What is causation also known as?

• Random association

• Cause-and-effect relationship

• Correlation

• Statistical anomaly

Which of the following is an example of causation?

• Rainfall and low temperatures

• Traffic and cellphone sales

• Height and weight

• Temperature and ice cream sales

What is a common mistake when interpreting correlation?

• Thinking correlation is always positive

• Ignoring correlation altogether

• Believing correlation is always negative

• Assuming correlation implies causation

In the example of Rena's bad mood and tiredness, what was the third variable causing both?

• Weather

• Work stress

• Lack of sleep

• Traffic jam

Why are controlled experiments necessary in determining causation?

• They are faster

• They are cheaper

• They eliminate bias

• They establish cause-and-effect relationships

What should be considered before making business decisions based on correlation?

• Past experiences

• Common sense

• Statistical analysis

• Intuition