Posted on:

15 May 2023


Covariance of house size and house price

In the shown real estate example, if we notice carefully, the house price isn't increasing but instead decreasing for an increased house size in the fifth entry when compared from an immediate lower valued house size in the second entry.

In the movement of house size from 785 ft to 975 ft, the house price has decreased rather from $998,000 to $895,000. 

The covariance, being positive, as calculated in the lecture, tells us a same direction movement sense of the variables. So, then, how do we interpret this anomaly in that observation?

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