About Correlations

Let's say you are going to look at the link between "Item A" and "Item B." A perfect negative "correlation," shown numerically as -1.0 (on a scale of -1.0 to +1.0), means that when Item A goes up one step, Item B goes down one step (and vice versa—correlation by itself does not show which movement causes the other). At the other extreme, a perfect positive correlation of +1.0 means when either item goes up one step, so does the other. A 0.5 correlation would mean that when one item moves one full step, the other moves only a half step, while a correlation of 0 would mean there is no connection at all between the movements of the two. In short, the distance of the number from zero shows the strength of the link, and the sign (positive or negative) shows whether the items move in the same or opposite directions.

Be careful when consultants or journalists report on correlations, though. Often people make the mistake of assuming one correlated item caused the second, but again, a correlation by itself says nothing about which movement caused the other. Other types of research and statistics are needed to establish a cause—even if the timing seems obvious.

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