# How to test for spatial correlation in my data

I am new to the realm of spatial statistics, so I need some help.

I have data that locates foreign-owned firms by XY coordinate and domestically-owned firms by XY coordinate.

I have plotted the points on a map in Arc Map.

I want to test the correlation between two maps in other words.

I want to see whether domestically-owned firms are more likely to locate where there is a foreign firm in close proximity i.e. is the location between both sets of firms not independent of one another.

I first thought of Moran's I test, but upon further reflection I am not sure it is appropriate in my case.

• how about setting a test on the pairwise distances between the domestically-owned firms and the foreign firms using Monte-Carlo simulation? – pe-pe-rry Dec 23 '15 at 3:48
• Okay thanks, I'm not so knowledgable on Monte-Carlo's, but I will investigate that! – Kelly Dec 23 '15 at 14:08

A quick answer while on Holiday: This appears to be a question in the realm of spatial point processes, and I would recommend having a look at the R package spatstat (which I'm co-developer of). We have also recently published a book which would probably be useful if you have access to that at your library. One option would be to fit a simple Poisson model for the domestic firms with the distance to nearest foreign firm as a covariate. Maybe you can find enough info to do this analysis in our free sample chapter 9, which you can download here: