1.What is Covariance?#

Covariance is used for describing the variance between two Random Variables.

Let’s understand it by an example.

Sales of ice-cream in a shop with respect to increase in temperature.

Sales of Ice Cream with increase in temperature.

From the table you can see when (x-x̅ ) and (y-ȳ) both are positive or when both are negative you get the product as positive which is further used to find out the covariance. We can say that temperature and sales of ice cream are positively correlated to each other in this scenario.

But when one of the value in (x-x̅ ) and (y-ȳ) is positive and another is negative we get the value as negative and we can say that it is negatively correlated.

Covariance Formula.

Covariance in our example will be 600/4=150

2.What is Correlation?#

As the name suggest correlation is how two variables are related to each other.

There are broadly three types of correlation

1. Positive correlation
2. Negative correlation
3. No correlation

You must have noticed that as the height of the person increases the weight of the person also increases. Which means height and weight are correlated to each other and they are positively correlated because as you can see as the height increases the weight is also increasing.

Positive Correlation.

Suppose you want to reach at some destination so as you increase the speed of your car eventually the time taken by you to reach the destination will decrease. So here we can see that there is a negative correlation in this as the speed of the car increases the time taken to reach the destination decreases.

Negative Correlation.

And an example of the no correlation would be the amount of ice-cream you eat your intelligence.

No Correlation.

Formula for Calculating Correlation.

3.What is Causation?#

Causation is a relationship between two events where one event is caused due to the another event. But one thing to remember that causation and correlation are two different thing and will try to explain you by an example.

Ice cream sales is correlated with homicides. But can we say because the people are consuming more ice cream they are going out and killing the people?Absolutely No. So there would be correlation in this but there is no causation.

Example of causation would be if you do more work out the more number of calories you will burn. You burned more calories because you have done more work out so here one event occurred due to occurrence another event.

The END#