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CA Foundation · Quantitative Aptitude · Correlation and Regression

A student finds that the correlation between the number of ice-cream cones sold and the number of drowning incidents across months in a coastal city is +0.8. Which conclusion is most appropriate?

Both variables are probably driven by a third factor such as hot summer weather, so the high positive correlation does not prove that one causes the other. Correlation only measures the degree of association between variables, and a high value can arise from a common cause.

  1. AIce-cream sales cause drowning incidents
  2. BDrowning incidents cause higher ice-cream sales
  3. CBoth may be influenced by a third factor such as hot weather, so the correlation does not prove causationCorrect
  4. DThe correlation must be spurious and the coefficient is wrongly calculated because it exceeds 0.5

Explanation

Correlation measures association, not cause and effect. Here a common factor, hot weather, likely raises both ice-cream sales and swimming. Option 4 is wrong because a value of 0.8 is perfectly valid and nothing about the calculation is incorrect.

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