INSTITUTE FOR EXCELLENCE IN

HIGHER EDUCATION, BHOPAL.

Subject - Economics

TOPIC – SPEARMANS CORRELATION

COEFFICIENT

Name – Priyanka Gopal Biyani

Roll no. - 221050
 WHAT IS CORRELATION?
•Correlation refers to the statistical relationship between
two entities.
• In other words its how two variables move in relation to
one another.
•Correlation can be used for Various data sets as well.
•Correlation analysis in research is a statistical method used
to measure the strength of the linear relationship variables
and compute association. between their associaton.
 DEFINITIONS
According to simpson and Kafka, Correlation analysis
deals with the association between two more variables.

Lun Chou defines, "Correlation analysis attemps

determine the degree of relationship between variables’’
 • ABOUT CHARLES SPEARMAN

•Charles Edward Spearman was a well-known British psychologist born on

10th Sept 1863. He showed exceptional talent and began his career by
joining the British Army; and after retirement from army, he decided to
pursue a PHD in Experimental Psychology.
• Charles Spearman is considered the epitome of factor analysis. He was
the first to use mathematical methods to analyse & interpret the twisted
human brain.
•The psychologist invented Spearman's Rank correlation coefficient to
prove his hypothesis. The Spearman correlation coefficient is implemented
for using / measuring the statistical dependency between a couple of
variables.
INTERPRETATION OF SPEARMAN'S RANK
CORRELATION COEFFICIENT

The Spearman's rank correlation coefficient, ranges

from +1 to -1.
•Rs = +1 denotes a perfect association of ranks.
•Rs = -1 denotes a perfect negative correlation of
ranks.
•Rs = 0 denotes no association between ranks.

The closer the value of Rs is to zero, the weaker the

association or correlation between the ranks.
CALCULATION OF
SPEARMAN's RANK
CORRELATION
Case 1: When Ranks are given
In this case, the ranks of the frequency distribution or variables are already
given, and the coefficient of rank correlation is calculated based on those
ranks. The formula for calculating Spearman’s Rank Correlation is

Here,
rk = Coefficient of rank correlation
D = Rank differences
N = Number of variabl
Case 2: When Ranks are not given
When the ranks of the variables or distribution are not given, then the
individual has to rank the values themselves. While ranking the values, one
has to adopt a uniform procedure for both series of distribution. For
instance, if 1st rank is given to the lowest value of one series, then the same
pattern should be followed for the second series as well. Once the rank has
been determined, the coefficient of rank correlation is determined as the
first case. The formula for calculating Spearman’s rank correlation
coefficient
Case 3: When Ranks are equal
When two or more values of a series have an equal rank, then in such
cases, each value is given the average of the two ranks. To avoid any
mistake, the formula for calculating Spearman’s Rank Correlation
Coefficient

Here, m1, m2, ……. are the number of times a value has repeated in the
given X, Y, …….. series, respectively.
•MERITS-
•Easy to understand & calculate.
•This is the only formala used. if we want to see the association of qualitative
characteristics.
•Allows further investigation.
•Do not make assumption of normal distribution
•Demonstrates the significance of data.

•DEMERITS –
•It cannot be used to calculate correlation coefficient for bivariate data
•If n>30, this formula is time consuming.
•To run the test, you will need two sets of variable data
•It is fairly complicated there is possibility of misinterpretation.
THANK YOU!!