A statistical tool that helps to measure

and analyze the degree (i.e. extent)

and direction (i.e. directly or inversely
proportional) to which two or more
variables fluctuate with reference to
each other.
A measure of correlation which
summarizes in one figure the degree of
correlation and direction of correlation
between two variables.
It is denoted by “r”.
-1  r  +1
Value of r Signifies
+1 Perfect Positive Correlation.

-1 Perfect Negative Correlation.

0 No Correlation.
Scatter Diagram Method

Karl Pearson’s Coefficient of Correlation

Spearman’s Rank Correlation Coefficient

Method of Least Squares

Given data is plotted on the graph in
the form of dots.
Though it is Simple, Easy to
understand and non-mathematical.
But it fails to establish an exact
degree to correlation.
Let’s realize this…
Y Y

X X

High Degree of Low Degree of

Positive Correlation Positive Correlation
Y Y

X X

High Degree of Low Degree of

Negative Correlation Negative Correlation
 Y

No X
No Correlation

Could we determine the exact

coefficient of correlation???
Now there felt a need for…

Also Known as
Let X and Y be the two variables under study.
Coefficient of Correlation (r) = (x y) /[(x2)(y2)]

Where,
x2 = {X2}—{[(X)2] / n}
y2 = {Y2}—{[(Y)2] / n}
x y = {XY}—{[(XY)] / n}
 Example

The following data relates to the age (in

years) of ten employees and the number of
days on which they reported sick in a
month:
Age:
20 30 32 35 40 46 52 55 58 62
Sick
Days: 1 2 0 3 4 6 5 7 8 9
 Sick Days
Age(X) X2 Y2 XY
(Y)
20 1 400 1 20
30 2 900 4 60
32 0 1024 0 0
35 3 1225 9 105
40 4 1600 16 160
46 6 2116 36 276
52 5 2704 25 260
55 7 3025 49 385
58 8 3364 64 464
62 9 3844 81 558
Sum:- 430 45 20202 285 2288
 Solution Continued…
X = 430, X2 = 20202, Y = 45, Y2 = 285
XY = 2288
x2 = {X2}—{[(X)2] / n}
x2 = 20202 –{[(430)2] / 10} = 20202—{184900 / 10}
x2 = 1712
y2 = {Y2}—{[(Y)2] / n}
y2 = 285 – {[(45}2] / 10} = 285 –{2025 / 10}
y2 = 82.5
x y = {XY}—{[(XY)] / n}
x y = 2288 – {[(430)(45)] / 10} = 2288 – {[19350 /10}
x y = 353
 Solution Continued…
Coefficient of Correlation (r) = (x y) /[(x2)(y2)]

r = 353 / (1712)(82.5) = 353 / 375.8191

r = +0.94

Interpretation: There is a very high degree of positive

correlation between age and sick days, i.e. as the age
increases the sick days per month also increases.
 Wow!!
In one figure we can obtain both: - The
exact degree as well as direction of
correlation.
Thanks to Karl Pearson.

Indeed.
He was a great
British Biometrician.
What if quantitative measure of certain
factors cannot be fixed, I mean like
judgment of female beauty???
Can we use Karl Pearson’s Correlation
Coefficient?

No

For that we use Spearman’s Rank

Correlation Coefficient, developed
by British psychologist Charles
Edward Spearman.
Introduced by Charles Edward Spearman in 1904
to deal with situations where quantitative
measure of certain factors cannot be fixed, but
the individuals in group can be arranged in order
by ranks. It is applied to a set of ordinal rank
numbers, with ‘1’ for the individual ranked first
in quality or quantity, and so on.

The value of R lies between -1 and +1.

Actual Ranks are given.

Ranks are not given.

“Equal ranks” or “Tie in Ranks”.

In a fashion competition organized
by “Digjam Suitings”, the ranks
given by two judges, Mrs. Sonali
Rana and Mr.Keshav Patil to 10
participants are given in the
following slide. Calculate the rank
correlation coefficient. Interpret the
result.
Participant No. Judge 1 Judge 2
(Mrs. Sonali) (Mr. Keshav)
1 1 7
2 2 5
3 7 8
4 9 10
5 8 9
6 6 4
7 4 1
8 3 6
9 10 3
10 5 2
Marks %age obtained by employees (due
for promotion) in the practical test and
in viva voice are given in the following
slide. Calculate the rank correlation
coefficient. Interpret the result.
Practical Test Viva Voice
92 89
95 91
89 72
87 79
86 81
78 82
69 71
73 73
52 80
90 85
At times it may
be found
necessary to
assign equal
ranks to two or
more entries.

In such cases,
it is customary
to give each
such entry an
average rank.
The following data refers to gross
investment as a percentage of
National Income and the percentage
of growth in National Income in nine
selected countries. Find the rank
correlation coefficient from the data.
Gross Investment National Income
(in %age) Growth (in %age)
19.2 3.4
18.8 3.6
19.5 4.9
25.9 7.1
21.8 5.6
26.0 4.9
28.1 3.8
17.4 2.6
17.4 3.5