Correlation and Causality

Correlation is not causality, they are two different concepts.

Correlation

Correlation is a relationship between variables. When the value of X goes up (or down), the value of Y goes up (or down) in a predictable way. The height and weight of a person are correlated. Their eye color and their weight is not.

Causality

Causality is a cause-effect relationship between variables. A change in the value of X is the cause of a change in the value of Y. For example, viruses make you sick. Be careful not to confuse the cause and the effect: you sneeze because you have a cold, but you don’t have a cold because you sneeze.

Proving a cause and effect relationship is difficult, as all other variables must be controlled. It is also possible for an observation to have more than a single cause; the change of the price of a stock is an example. Normally, the change in the variable causing a change in the other is observed before the change of the value of the dependent variable.