DIAMONDS LEVEL 1
I am interested in buying a diamond ring. Diamonds are a symbol of wealth and power, being naturally made from compressed carbon. Diamonds are a popular gem used in jewelry but also find applications in industry. I am aware that the larger a diamond is the higher the price they sell for. Although my research into diamonds confirms this, I have discovered that there are other factors affecting the price of a diamond using the 4C's system. This being a measure of carat (weight), clarity, colour and cut. Over the years the price of diamonds has increased due to market demand.
I want to find out if there is a direct relationship between the weight of a diamond and its price. The source of my data used in this investigation is based out of Singapore and taken from the NZGrapher data base.
I want to find out if there is a direct relationship between the weight of a diamond and its price. The source of my data used in this investigation is based out of Singapore and taken from the NZGrapher data base.
Plan
The Explanatory (independent) variable is the weight of a diamond in carats (1 Carat = 0.02 Grams). The response (dependent) variable is price of the Diamond. Price is measured in US dollars. I chose diamond weight (Carat) for the explanatory variable because I think that out of all the variables this will have the strongest influence and most direct relationship with the price of diamonds.
data
analysis
Referring to the graph above there appears to be a positive linear trend as the scatter appears at the bottom left and gradually increases to the top right corner. Because the trend appears to be linear, I will fit a linear regression line to investigate this further. This means that a larger carat diamond tends to have a larger price tag.
Class Notes - Analysis Using TASGUS
Trend - Linear Or Non-Linear
Association - Positive Or Negative
Strength - Weak, Moderate Or Strong
Groups - Or Clusters With Possible Reasons
Unusual Data - Anything Worth Noting
Scatter - Is It Even (Consistent) Or Changing Trend
trend
Looking at the linear regression line I notice that the data at the lower left of the graph sits above the regression line below about 0.3 carats. Most of the data points are below the regression line between about 0.5 and 0.9 carats. Finally around the 1 carat weight some data points return above
association
I can see that the association is positive because as the diamonds increase in weight, the price of the diamonds also increases. That is, the heavier the diamond the higher the price.
Strength
The strength of the relationship is moderate as I can see that most of the points form a reasonably consistent pattern up to about 0.6 carats in weight. From about 0.6 carats and above, the scatter is further away from the regression line.
groups
I notice that there are groups or clusters of data points along the regression line. This occurs especially around 0.2 to 0.4 carats, from 0.5 to 0.6 carats and significantly around 1 carat in diamond weight. This should not be surprising since 0.5 and 1 carat diamonds are very popular for young couples or those purchasing their first diamond engagement ring
unusual data
There are approximately 6 or 7 diamonds whose data points float above the regression line. Many 1 carat diamonds are of different prices. One diamond weighs 0.75 carats with a price of nearly $7000. Four of the 1 carat diamonds are priced from $8000 to over $11000.
scatter
For the quadratic model, the scatter appears to be reasonably consistent for carat weights below about 0.6 carats. But above 0.6 carats it tends to fan out. More noticeable is where this happens around the 1 carat diamond weight. This is because there are a greater variety of diamonds in the 1 carat weight range whose price probably depends on other factors.
conclusion
Based on the information I have gathered I conclude that diamonds which weigh more (more carats) generally will command higher prices. This is shown on the graphs showing a positive linear relationship between carat and price of diamonds.