Data were collected for a sample of companies regarding their investment in quality improvement efforts and cost savings realized as a result (both measured as a percentage of sales revenue). The correlation coefficient for these data is r = 0.913. If the data were collected for individual departments within companies rather than at the company level, we would expect
A) a stronger correlation
B) a weaker correlation
C) the same correlation
D) fewer outliers in the data
E) No expectation with regards to regression modeling can be drawn from the given information.

Question

Quizplus · Accepted Answer

The correlation coefficient is likely to weaken when data is collected at a more granular level, such as individual departments, since there may be more variation in the data due to differences in department size, budget, etc. It is less likely that the correlation would remain the same or strengthen, and there is no information given regarding outliers or regression modeling.

Data Were Collected for a Sample of Companies Regarding Their