A Business Encyclopedia

Probable Error of Correlation Coefficient

The Probable Error of Correlation Coefficient helps in determining the accuracy and reliability of the value of the coefficient that in so far depends on the random sampling.

In other words, the probable error (P.E.) is the value which is added or subtracted from the coefficient of correlation (r) to get the upper limit and the lower limit respectively, within which the value of the correlation expectedly lies.

The probable error of correlation coefficient can be obtained by applying the following formula:

P.E.r-1r = coefficient of correlation
N = number of observations

  • There is no correlation between the variables if the value of ‘r’ is less than P.E. This shows that the coefficient of correlation is not at all significant.
  • The correlation is said to be certain when the value of ‘r’ is six times more than the probable error; this shows that the value of ‘r’ is significant.
  • By adding and subtracting the value of P.E from the value of ‘r,’ we get the upper limit and the lower limit, respectively within which the correlation of coefficient is expected to lie. Symbolically, it can be expressedP.E.r-2

where rho denotes the correlation in a population

The probable Error can be used only when the following three conditions are fulfilled:

  1. The data must approximate to the bell-shaped curve, i.e. a normal frequency curve.
  2. The Probable error computed from the statistical measure must have been taken from the sample.
  3. The sample items must be selected in an unbiased manner and must be independent of each other.

Thus, the probable error is calculated to check the reliability of the value of coefficient calculated from the random sampling.

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

meaning of ulteriormonopoly characteristics economicselements of a promotional mixvalence theory psychologyexplain manpower planningmcclelland's three needs theorysellout meaningdefinition of loafingwhat is teleology in ethicsporters 5 forces modelwhat is meant by whistleblowingequity carveoutwhat is informal communication in business organizationmeaning of idftraveller cheque meaningmeaning of marketerspert programethical systems definitionmeasurement and scaling in research methodologywhat is gangplank in managementvictor vroom theory of motivationdefinition of ethnocentrismherzbergs motivational theorywhat does ethnocentrism meanwhat is the cash reserve ratioherzberg's theorythe explicit cost of production is also calledslr definationdistinguish between explicit and implicit costattack marketing and promotionswhat is classical conditioning definitionskimming pricing strategy definitionteleological examplesscientific management taylorismhow to do spearmans rankstages of collective bargaining processansoff growthexamples of denotation wordsformal communication and informal communicationlikert methodrevenue deficit vs fiscal deficitethnocentric approach to staffinghygiene theory herzbergdefine holistic marketingvh vroompsychoanalytic personality theorycardinal law definitionwhat is vestibule trainingdifference between forwards and futurescollusive and non collusive oligopolydefine fixed cost in economicsvariable cost economics definitiongeocentric marketingfayol management principleskiosk banking meaningoligopoly firmswing loan definitiondefinition pure competitionpath-goal leadership stylescorporate downsizing definitiondifference between lessor and lesseegordon's growth modelansoffs growth matrixmeaning of vamguerrilla tactics definitionseasonal unemployment meaningwhat does straddling meantraining techniques in hrmposits meaningdeontological definitionexamples of forward integration