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Research on Correlation What is correlation? This measures the relationship that exists between two or more variables. A positive (or direct) correlation is said to exist where one variable increases along with the other, and vice versa (e.g. as disposable income per head rises, then so too does expenditure on food products). A negative (or indirect) correlation is said to exist where one variable declines as the other rises, and vice versa (e.g. as the price of new cars falls, demand for new cars will tend to rise). Why do Businesses use it? Businesses may use correlation for number of reasons. They could use their statistics to anticipate how the market will react to a sudden change in supply and demand. For example, if the price of the average computer falls, there may be a slight or sudden change in consumer spending, however, depending on the market, the change may rise for those who...

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