Covariance
Covariance is one of a family of statistical measures used to analyze the linear relationship between two variables.
How do two variables behave as PAIR?
There are certain terminology like covariance, correlation, linear regression etc.. make confuse how all are related to each other. here linear regression related to correlation which is related to covariance in nature so all this measures analyses by looking with linear relationship between two variables.
Covariance is a Descriptive measure of the linear association between two variables that is very simple to interpret.
1. A positive value indicates a direct or increasing linear relationship.
2. A negative value indicates a decreasing relationship.
A concept here is the direction that is sign on the covariance whether it is positive or negative
For Example, if we have 4 quadrants like (I ,II ,III ,IV)
I - (+,+) : represents the both x and y values are positive.
II - (-,+) : represents the x is negative and y is positive.
III - (-,-) : represents the both x and y values are negative.
IV - (+,-) : represents the x is positive and y is negative.
In I and III quadrant variables move in same direction that is called covariance positive means if x goes up than y goes up. In quadrant I, x goes down than y goes down in quadrant III so slop in this quadrant is positive.
lets take another direction for II and IV, In this case if x goes down but y increases in II so that variables are exhibiting opposite behavior or x goes up but y decreases in IV so if variables move in opposite direction in this case it is negative covariance because slop is negative.
In some case, All points are mixed up in all quadrant so here variables are seems to have no linear relationship In this case the covariance is near or equal to zero.
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