From the course: Data, Economic Modeling, and Forecasting with Stata

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Correlation

Correlation - Stata Tutorial

From the course: Data, Economic Modeling, and Forecasting with Stata

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Correlation

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- [Narrator] One of the goals of using the mean and summarize commands is to get familiar with your data. Another way to get familiar with your data before you begin regression analysis and forecasting, is to look for correlations. The command for this in Stata is C-O-R-R-E-L, correl. And let's take a look at some of the data we have. For example, let's look at those aluminum closing prices, one month out and compare it to that sum of the PMIs. We see here that there's a statistically significant and positive correlation. In fact, this is a correlation of almost 0.5 and because it's positively correlated, it means that when PMIs go up, aluminum prices, generally will go up as well. If this had been an inverse correlation the number would've been negative, and that would mean that, for example when the PMIs go up, aluminum prices would go down. But this is a positive correlation. Let's take a look at some of the other data…

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