Certified Supply Chain Professional (CSCP) Practice Exam

What does a correlation coefficient of +1 indicate?

1. Weak negative correlation

2. No correlation

3. Perfect positive correlation

4. Strong random correlation

The correct answer is: Perfect positive correlation

A correlation coefficient of +1 signifies a perfect positive correlation between two variables. This means that as one variable increases, the other variable also increases proportionally. In practical terms, if you were to graph these two variables, you would find that all data points lie perfectly on an upward-sloping line. This strong relationship is critical in various fields, including supply chain and data analysis, as it helps in predicting how changes in one variable can reliably influence another. Understanding correlation coefficients is essential for making informed decisions based on data, as they guide interpretations regarding the strength and direction of relationships between variables. The other interpretations reflect different relationships that do not apply to a +1 coefficient; a weak negative correlation would mean a reverse relationship, no correlation indicates that there is no discernible relationship, and a strong random correlation implies variability without a predictable pattern. In contrast, the +1 coefficient clearly establishes a definitive and consistent positive link between the two areas of interest.