If we have a qualitative predictor variable with four possible categories, say, A, B, C, and D, and if x1, x2, and x3 are, respectively, the indicator variables for categories A, B, and C, give a table of the values of x1, x2, and x3 for the fourcategories A, B, C, and D.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
If we have a qualitative predictor variable with four possible categories, say, A, B, C, and D, and if x1, x2, and x3 are, respectively, the indicator variables for categories A, B, and C, give a table of the values of x1, x2, and x3 for the four
categories A, B, C, and D.
The data represents the four categories A, B, C and D of the qualitative predictor variable and 3 indicator variables x1, x2, and x3 for the categories A,B and C.
Qualitative predictor variable: The values of the qualitative variable do not occur naturally on a numerical scale and mathematical operations cannot be performed on these values. That is, the qualitative data are non-numerical measures such as characteristics, attributes or labels whereas quantitative data are numerical measures on which arithmetic operations are possible.
A variable that is used for classification of individuals based on some attributes or qualities or characteristics are called categorical or qualitative variable.
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