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  • Correlation between continous and categorical variable

    Dear all,

    I would like to compute the correlations between several continous variables and a categorical variable.

    Specifically, the continuous variables are scores (taking any value between 0 and 1), and the categorical variable is an industry classification (Healthcare, Tech, Consumer Goods, Other).

    Which test can I use to compute the correlations between these types of variables? Or should I re-code the industry classification to dummy variables and run a Pearson or Spearman correlation?

    Thank you very much in advance for your comments!

    Best, Diane

  • #2
    No standard correlation coefficient (at least of Pearson, Spearman, Kendall) makes sense here as your industry classification appears nominal, and not ordinal. You certainly can regress your continuous responses against a categorical variable treated as a series of dummies (indicators).
    Last edited by Nick Cox; 15 Nov 2018, 12:09.


    • #3
      Thanks, very helpful! That's what I've done now.