Using Excel's correlation function I get a correlation of -7% between data sets A & B. Data set C has a 92% correlation to A and an 84% correlation to B. How can C be strongly correlated to A and B, but A and B are slightly negatively correlated to one another?
What other tests can I perform to help me better understand the relationships between A, B & C?
You could make scatter plots of each with each.
As to how it is possible, imagine this:
a and b are entirely independent.
c = a + b.
So, we would have something like (in
R code; stuff following a # is comment)
set.seed(1) a <- rnorm(100) b <- rnorm(100) c <- a + b cor(a,b) # - 0.0009 cor(a,c) # 0.68 cor(b,c) #0.72
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