Correlation and Regression with Excel
Correlation is a mutual relationship or connection between two or more continuous variables. Regression is a mathematical model to define that relationship. Process Data Analysis analyzed transfer functions Y = f ( X ) where X was an attribute. Now we will analyze the case of X being a variable. Download Excel file Regression.xlsx from OneDrive to your PC to run the following examples. Correlation We have collected Natural Gas Demand data in sheet Correlation : This is actual daily demand during the month of January and the average local temperature recorded on those days. From the date time stamp we have computed the day of the week (1 being Monday). We are looking for factors that may affect demand and two possible factors may be Temperature and DOW. We will use Excel Data Analysis: Correlation Results: We detect a negative ( - 0.85 ) significant correlation between demand and temperature: the lower the temperature the higher the natural gas demand. This is what we would expec