## Calculating the Correlation Coefficient of Two Variables

The formula used to calculate the correlation coefficient of two variables, house size (X) and selling price (Y), is as follows:

r = (NΣXY – (ΣX)(ΣY)) / √[(NΣX2 – (ΣX)2)(NΣY2 – (ΣY)2)]
where N is the number of observations, Σ is the sum of the observations, and X and Y represent the two variables.

## Calculating the Sum of Observations

In order to calculate the correlation coefficient, you need to calculate the sum of observations for each variable. Assuming that data for both variables are placed on different cells, house size (X): Cell A2 to Cell A16; selling price (Y): Cell B2 to Cell B16, then you can calculate the sum of observations for each variable using the following formula:

ΣX = SUM(A2:A16)
ΣY = SUM(B2:B16)

## Calculating the Sum of Products of Observations

The next step is to calculate the sum of products of observations for each variable. This can be done using the following formula:

ΣXY = SUMPRODUCT(A2:A16,B2:B16)

## Calculating the Sum of Squares of Observations

Finally, you need to calculate the sum of squares of observations for each variable. This can be done using the following formula:

ΣX2 = SUM(A2:A16^2)
ΣY2 = SUM(B2:B16^2)

## Related Questions:

• What is the formula for calculating the covariance of two variables?
• What is the formula for calculating the correlation coefficient of three variables?
• How do you calculate the correlation coefficient of two data sets?
• What is the difference between correlation and causation?
• What are the assumptions of linear regression?
• How do you calculate the coefficient of determination?
• What are the types of correlation?
• How do you interpret a correlation coefficient?
• What is the difference between correlation and regression?
• How do you calculate the confidence interval of a correlation coefficient?