5.4. GRAPHICAL REPRESENTATION

A common graphical tool used with bivariate data arrays is given by the so-called scatter diagram or scatter plot. In this diagram, the values of each pair are displayed. Along the horizontal axis, usually the values of the first component are displayed while along the vertical axis, the values of the second component are displayed. The scatter plot is helpful in visualizing whether the variation of one component variable somehow affects the variation of the other. If, for example, the points in the scatter plot are dispersed all over in no discernible pattern, the variability of each component may be unaffected by the other. This is visualized in Figure 5.2. The other extreme is given if there is a functional relationship between the two variables. Here, two cases are depicted. In Figure 5.3, the relationship is linear whereas in Figure 5.4, the relationship is of some higher order.^[] When two (or more) variables are observed at a certain point in time, one speaks of cross-sectional analysis. In contrast, analyzing one and the same variable at different points in time, one refers to as time series analysis. We will come back to the analysis of various aspects of joint behavior in more detail in the subsections that follow this discussion.

^[] As a matter of fact, in Figure 5.3, we have y = 0.3 + 1.2x. In Figure 5.4, we have y = 0,2 + x³.

Figure 5.2. Scatter Plot: Extreme 1—No Relationship of Component Variables x and y