A tech company calculates the correlation coefficient (r) between its monthly marketing spend and its monthly software subscriptions to be +0.85.

Which of the following statements is the most accurate interpretation of this result?

Answer options:

Marketing spend causes 85% of the increase in software subscriptions.

There is a strong positive linear relationship between marketing spend and software subscriptions.

72.25% of software subscriptions are generated by marketing spend.

There is a weak positive linear relationship between the two variables.

How to approach this question

Evaluate the value of r. Values close to +1 indicate a strong positive linear relationship. Remember that correlation does not equal causation.

Full Answer

B.There is a strong positive linear relationship between marketing spend and software subscriptions.✓ Correct

The correlation coefficient (r) measures the strength and direction of a linear relationship. A value of +0.85 is close to +1, indicating a strong positive linear relationship. It does not prove causation.

Common mistakes

Assuming correlation implies causation, or confusing r with r-squared.

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