QUANTITATIVE TECHNIQUES

SPEARSMAN’S RANK
CORRELATION

Presented by: Group 2

TOPICS TO BE COVERED
1. Introduction to Spearman's Rank Correlation
2. Assumptions
3. Calculation of Spearman's Rank Correlation Coefficient
4. Handling Ties and Outliers
5. Interpretation of the Coefficient
6. Visual Representation
7. Comparison with Other Correlation Measures
8. Strengths and Limitations
9. Real-life Examples and Applications
10. Conclusion
INTRODUCTION
• The Spearman rank-order correlation coefficient
(Spearman’s correlation, for short) is a nonparametric
measure of the strength and direction of association that
exists between two variables measured on at least an
ordinal scale.

• It is denoted by the symbol rs (or the Greek letter ρ,

pronounced rho).

• The test is used for either ordinal variables or for

continuous data that has failed the assumptions necessary
for conducting Pearson's product-moment correlation.
 ASSUMPTIONS
Measurement of two variables

Paired Observations

Monotonic Relationship
 Formula

p- represents the coefficient

n- represents the no. of observation in the data set

d2 - The square of the difference in the ranks of the two coordinates for each point (𝑥,𝑦)
 METHOD TO CALCULATE
Calculating Spearman's Rank
Ranking the Square the
Correlation Coefficient
Data Differences

2 4 6

1 3 5

Data Calculating the Sum of

Collection Differences Squared
Differences
 HANDLING TIES
Marks Rank Marks Rank

49 5 54 5

68 4 69 3

72 2.5 69 3

72 2.5 76 2

89 1 89 1

Average Method Bracket Method

Interpretation of Coefficient
A strong positive monotonic relationship between the
close to +1 ranked variables, meaning they tend to increase together.

A strong negative monotonic relationship between the

close to -1 ranked variables, suggesting that as one variable
increases, the other tends to decrease.

A weak or no monotonic relationship between the

close to 0 variables.
VISUAL REPRESENTATION
 Relationship Type:
Pearson: Measures linear relationships.
Spearman: Focuses on monotonic relationships, not specifically linear.

Data Type:
Pearson: Works with interval or ratio level data.
Spearman: Handles ordinal or ranked data.

Outlier Sensitivity:
Pearson: Sensitive to outliers due to actual values.
Spearman: Less affected by outliers as it uses ranks.

Assumptions:
Pearson: Assumes linearity between variables.
Comparison with Spearman: Doesn't assume linearity, suitable for non-linear
relationships.
Karl Pearson’s
Method Calculation Method:
Pearson: Computes based on covariance and standard deviations.
Spearman: Involves ranking the data before correlation calculation.
 STRENGTHS WEAKNESSES

•Easy to understand. •In capable of grouped data.

•Qualitative observations •Limited observations handling.
•Order preferences, not actual value •Considers the ranks ignoring the
•Robust to outliers present in data magnitude of the variables.
•Loss of information in rank conversion
 REAL LIFE APPLICATIONS
Market Research Education

Psychology Environmental Science

Medical Field Business Development

 SUMMARY
Spearman's rank correlation is like a detective that spots if things generally
go up or down together, without caring if they follow a straight line. It's
great for comparing things when their actual numbers don't matter much,
and it doesn't get tricked by weird outliers, making it a handy tool for
different subjects and situations where normal rules might not apply.