For which of these reasons would you create a scatterplot between two variables?
A chart type normally used to observe and visually display the relationship between variables Show
What is a Scatter Plot?A scatter plot is a chart type that is normally used to observe and visually display the relationship between variables. The values of the variables are represented by dots. The positioning of the dots on the vertical and horizontal axis will inform the value of the respective data point; hence, scatter plots make use of Cartesian coordinates to display the values of the variables in a data set. Scatter plots are also known as scattergrams, scatter graphs, or scatter charts. Summary
Scatter Plot Applications and Uses1. Demonstration of the relationship between two variablesThe most common use of the scatter plot is to display the relationship between two variables and observe the nature of the relationship. The relationships observed can either be positive or negative, non-linear or linear, and/or, strong or weak. The data points or dots, which appear on a scatter plot, represent the individual values of each of those data points and also allow pattern identification when looking at the data holistically. 2. Identification of correlational relationshipsAnother common use of scatter plots is that they enable the identification of correlational relationships. Scatter plots tend to have independent variables on the horizontal axis and dependent variables on the vertical axis. It allows the observer to know or get an idea of what the possible vertical value may be, provided there is information on the horizontal value. 3. Identification of data patternsData pattern identification is also possible with scatter plots. Data points can be grouped together based on how close their values are, and this also makes it easy to identify any outlier points when there are data gaps. Seeing as scatter plots aid in the identification of correlations between variables, the nature of the correlations can also be estimated based on a specific confidence level.
Also, through the use of a “Line of Best Fit” or a trendline, scatter plots to help identify trends. Following the best-fit framework, an equation can be derived in conjunction with the relationship that exists between the variables. Linear regression is part of the best-fit framework and is used for linear correlations. Creating a Scatter Plot DiagramThe scatter plot diagram for the data above is seen below: To create a scatter plot diagram similar to the one above, the following steps can be taken in Excel:
The chart will be generated, and the heading and visual presentation can be adjusted in accordance with preference. Challenges with Using Scatter PlotsTwo common issues have been identified with the use of scatter plots – overplotting and the interpretation of causation as correlation. Overplotting occurs when there are too many data points to plot, which results in the overlapping of different data points. It can make relationship identification between variables challenging. Concerning correlation, it is important to remember that correlation does not mean that the changes observed in one variable are responsible for the changes observed in another variable. Correlation should not be interpreted as causation. Causation implies that an event occurring will have an impact on an outcome. More ResourcesIn order to help you become a world-class financial analyst and advance your career to your fullest potential, these additional resources will be very helpful:
What is the main reason for creating a scatterplot between two variables?Use a scatter plot to determine whether or not two variables have a relationship or correlation. Are you trying to see if your two variables might mean something when put together? Plotting a scattergram with your data points can help you to determine whether there's a potential relationship between them.
What is the purpose of a scatter plot?A scatter plot is composed of a horizontal axis containing the measured values of one variable (independent variable) and a vertical axis representing the measurements of the other variable (dependent variable). The purpose of the scatter plot is to display what happens to one variable when another variable is changed.
What is the relationship between two variables on a scatter plot?A scatterplot shows the relationship between two quantitative variables measured for the same individuals. The values of one variable appear on the horizontal axis, and the values of the other variable appear on the vertical axis. Each individual in the data appears as a point on the graph.
What are the two variables in a scatter plot called?A scatter plot is a plot of the values of Y versus the corresponding values of X: Vertical axis: variable Y--usually the response variable. Horizontal axis: variable X--usually some variable we suspect may ber related to the response.
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