CAS Exam 7 Spring 2015, Question 23
Study guide: Exam 9
Given the following ultimate loss estimates for a single line of business of an insurer operating in two states ($000,000):
| Accident Year | State A | State B |
|---|---|---|
| 2010 | 15 | 30 |
| 2011 | 19 | 23 |
| 2012 | 22 | 27 |
| 2013 | 18 | 28 |
| 2014 | 37 | 45 |
Part a (1.5 points)
Calculate the Pearson product-moment correlation between the losses from the two states.
Part b (0.75 points)
Calculate Spearman's \rho correlation between the losses from the two states.
Part c (0.5 points)
Explain the apparent discrepancy between the two correlation measures calculated above.
Answer this question and see the worked solution