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CA Foundation · Quantitative Aptitude · Correlation and Regression

A study finds that the number of ice-cream cones sold in Chennai and the number of sunglasses sold both rise during summer months. Both are in fact driven by temperature. This relationship between cones and sunglasses is best described as:

The relationship is spurious correlation. Cones and sunglasses move together only because both depend on temperature, a common third factor. The numerical association exists, but neither variable causes the other, and no statistical control for temperature has been applied.

  1. ASpurious (nonsense) correlation arising from a common third factorCorrect
  2. BPerfect negative correlation
  3. CZero correlation because neither causes the other
  4. DPartial correlation with the third factor held constant

Explanation

Both series move together because each depends on a common influence, temperature. The observed correlation is real numerically but does not indicate a direct cause-and-effect link, so it is treated as spurious. Partial correlation would require temperature to be removed statistically, which has not been done here.

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