Question 14 Marks
Compute Cov(x, y) for the following pair of observations:
(15, 44), (20, 43), (25, 45), (30, 37), (40, 34), (50, 37)
(15, 44), (20, 43), (25, 45), (30, 37), (40, 34), (50, 37)
Answer
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$\bar{x}=\frac{15+20+25+30+40+50}{6}=\frac{180}{6}=30$
and
$\bar{y}=\frac{44+43+45+37+34+37}{6}=\frac{240}{6}=40$
Now, construct the following table:
So, $\quad \begin{aligned} \operatorname{Cov}(x, y) & =\frac{1}{N} \Sigma(x-\bar{x})(y-\bar{y}) \\ & =\frac{1}{6}(-235)=-39.17\end{aligned}$
$\bar{x}=\frac{15+20+25+30+40+50}{6}=\frac{180}{6}=30$
and
$\bar{y}=\frac{44+43+45+37+34+37}{6}=\frac{240}{6}=40$
Now, construct the following table:
| $x$ | $x-\bar{x}$ | $y$ | $y-\bar{y}$ | $(x-\bar{x})(y-\bar{y})$ |
| 15 | -15 | 44 | 4 | -60 |
| 20 | -10 | 43 | 3 | -30 |
| 25 | -5 | 45 | 5 | -25 |
| 30 | 0 | 37 | -3 | 0 |
| 40 | 10 | 34 | -6 | -60 |
| 50 | 20 | 37 | -3 | -60 |
| Total | -235 |
So, $\quad \begin{aligned} \operatorname{Cov}(x, y) & =\frac{1}{N} \Sigma(x-\bar{x})(y-\bar{y}) \\ & =\frac{1}{6}(-235)=-39.17\end{aligned}$

