Learning how to calculate correlation or dependence in Excel is a very simple but useful skill. Correlation calculation is a great way to determine if two sets of data are related in other words if one variable changes, does the second variable also change? It is also used to determine how much two sets of data are related to each other such as the relationship between price and demand. In other words, if the price for a product goes up, the demand for the product goes down. It is important to note that correlation or dependence does not imply causality. There may be a causal relationship between the two factors, but correlation in itself does not indicate that this is so.

A measure of the amount of correlation between two factors is correlation coefficient. If the correlation coefficient has a value of 1 or close to one, it indicates that the two data sets are highly correlated. If the value is 0 or very close to 0, the two factors are not correlated. If the correlation coefficient is equal to -1 or close to the value, the two factors negatively correlated. In other words, if one variable goes up the other one goes down. This number can also be used to evaluate the relative correlation between one set of factors versus another set of factors.

## Things You Will Need

Microsoft ExcelTwo data sets