Rank Correlation

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 Outline
• What is Rank Correlation.
• How it is calculated.
• What are its merits and demerits.

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 Rank correlation
• Since Karl Pearson’s coefficient of correlation is
based on assumption that population is normally
distributed there is need for a measure of
correlation that involves no assumption about
the parameters of the population.
• It is possible to avoid making any assumption
about the population by ranking the observations
according to the size and basing the calculations
on the ranks rather than upon original
observations.

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 Spearman’s Correlation
Coefficient

where ,
D = difference of ranks between paired itema in two
series.
N = number of paired observations
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 When ranks are given

Rank
Correlation

When ranks are not When equal ranks are

given given

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 When Ranks are given
• Steps when ranks are already given :
1. Take the difference of the two ranks i.e. (R₁-
R₂/ R₂-R₁)
2. Denote above difference as D
3. Square these differences.
4. Add up the differences to obtain ∑D2
5. Apply the formula

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 Method of teaching A B C D E F G
Rank by College A 2 1 5 3 4 7 6

Rank by college B 1 3 2 4 7 5 6

Method of Rank of A Rank of B D D2

teaching
A 2 1 1 1

B 1 3 -2 4

C 5 2 +3 9

D 3 4 -1 1

E 4 7 -3 9

F 7 5 +2 4

G 6 6 0 0

Total 28
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R= 1 - 6(28)
73 -7
= 1 – 168
343-7
= 1-168/336
= 1-.5
= + 0.5

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 When ranks are not given
• Steps:
1. Assign the ranks.
2. Ranks can be assigned by taking either the highest
value as 1 or the lowest value as 1. in either approach
, one has to follow the same method in both the
series.
3. Take the difference of the two ranks i.e. (R₁-R₂/ R₂-R₁)
4. Denote above difference as D
5. Square these differences.
6. Add up the differences to obtain ∑D2
7. Apply the formula

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 X 53 98 95 81 75 61 59 55

Y 47 25 32 37 30 40 39 45

X R1 Y R2 D D2

53 8 47 1 7 49

98 1 25 8 -7 49

95 2 32 6 -4 16

81 3 37 5 -2 4

75 4 30 7 -3 9

61 5 40 3 +2 4

59 6 39 4 +2 4

55 7 45 2 +5 25

Total BBA 104 160 11

R= 1- 6*160
83- 8
= 1 - 960
512-8
= 1 - 960
504
= 1-1.905
= - 0.905

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 When Ranks are Equal
• Sometimes , it is essential to rank two or more individuals
or entries as equal. In this situation it is mandatory to give
each individual an average rank. For example: if two
individuals are ranked equal at third place then they will get
(3+4) = 3.5.
2
i.e. when two or more items are to be ranked equal, the rank
assigned for purposes of calculating correlation coefficient is
the average of the ranks which these individuals would have
got had they differed slightly from each other.
Adjustment is also done in the formula for the same rank.

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 Item A b C D E F G H
Rank 5 3 1 6 2 3 8 7
1
Rank 3 4 1 8 2 5 5 5
Item 2 1
Rank Adj R1 Rank 2 Adj R2 D D2

A 5 5 3 3 +2 4

B 3 (3+4)/2= 4 4 -.5 0.25

3.5
C 1 1 1 1 0 0

D 6 6 8 8 -2 4

E 2 2 2 2 0 0

F 3 (3+54)/2= 5 (5+6+7)/3= -2.5 6.25

3.5 6
G 8 8 5 (5+6+7)/2= +2 4
6
H 7 7 5 (5+6+7)/2= +1 1
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6
R= 1- 6{∑D2 + 1/12(22- 2)+1/12(33 -3)}
83- 8
= 1- 6{19.5+1/12(8-2)+1/12(27-3)}
504
= 1- 6{19.5+.5+2}
504
=1-132/504
=1-.262
=+0.738
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 Question
Marks in Accountancy Marks in statistics

15 40
20 30
28 50
12 30
40 20
60 10
20 30
80 60

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 Merits /Demerits
• Easy to understand easy to apply
• When data is of qualitative nature, it is the
best method to apply.
• Only method when ranks are given & not the
actual data.
• It cannot be used for finding out correlation in
terms of grouped data.
• Not suitable to use when n exceeds 30 as
calculations become difficult.
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 Summary
• After studying student is able to answer ;
What is Rank Correlation.
How it is calculated.
What are its merits and demerits.

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