A Partial Fulfillment For The Subject Math 4:

Quantitative Techniques In Business (T-Th 1:30-3:00)

A Written Report For The Topic
Spearman Rank Correlation Method




Submitted To:
Mr. Kevin Lloyd Delmas

Submitted By:
Diana E. Belen
Pinkynash C. Lasaten
Jann-Mar T. Sacpa
Kisery Joy B. Santiago

Submitted On:
March 04, 2014
Spearmans Rank Correlation Coefficient/Method
-a convenient shortcut for calculating the correlation between two variables if n is less than 30
-it uses the ranks of the score instead of the score themselves and it can be use on data that can
be converted to ranks
-if the same score appears on a variable assign them the average of the ranks they would have
used if they had not been tied

Where:

= the coefficient

=the sum of the squared differences between ranks

n=the number of pairs of ranks
Example:
1.) We have here a table that shows the monthly salary and the monthly savings of ten
employees on a bank. Lets solve if there is a correlation on how much they earn in how
much they save.
Person Monthly salary(x) rank Monthly savings(y) rank
d (x)

Z Php.48,000 1 Php.11,400 1 0 0
Y Php.43,000 2 Php.8,900 2 0 0
X Php.40,000 3 Php.4,000 4

1
W Php.37,000 4 Php.6,500 3 1 1
V Php.30,000 5 Php.3,200 5 0 0
U Php.28,000 6 Php.2,800 6 0 0
T Php.25,000 7 Php.2,600 7 0 0
S Php.19,000 8 Php.1,600 10

4
R Php.17,000 9 Php.1,900 9 0 0
Q Php.14,000 10 Php.2,200 8 2 4
d=0 d
2
=10

Solution:

Conclusion: With the result of

this shows a strong positive relationship between

the monthly salaries of a person and its monthly savings. The monthly salary of a person
has something to do with his/her monthly savings.
2.) We have gathered here some data for the monthly allowance of ten students lets see if
there allowance has something to do with their grades.
student Allowance for a
month (x)
rank Average
grade(y)
rank d
(x)
d
2
(x)
2
A Php.4,000 1 79 9.5
8.5
72.25
B Php.3,750 2 85 5
3
9
C Php.3,550 3 86 4
1
1
D Php.3,000 4 79 9.5
5.5
30.25
E Php.2,800 5 84 6

1
F Php.2,500 6 88 2 4 16
G Php.2,000 7 83 7 0 0
H Php.1,250 8 89 1 7 49
I Php.1,000 9 80 8 1 1
J Php.850 10 87 3 7 49
d=0 d
2
=228.5

Solution:

Conclusion: Therefore in this situation it shows that the allowance of the students has a
little correlation to their grades. This means that the allowance of the students has
nothing to do if they get a high grade or a low grade.

Interpretation:

1 0.8 0.6 0.4 0.2
0 0.2 0.4 0.6 0.8 1




-if there is perfect positive correlation between variables, the pairs of ranks for each individual
will be identical
-if the relationship drops, the differences and

increase and

of course, gets smaller

-if the differences and

are very large that the fraction to be subtracted from 1 is greater

than 1 it will result to a negative

Strong
negative
correlation
Strong
positive
correlation
Weak
negative
correlation
Weak
positive
correlation
Little
correlation
- however, you must interpret in the context of the question.
-Spearman coefficient is nothing more than the Pearson r applied to untied ranks, and it would
be interpreted as the same manner as the Pearson r
-if some of the ranks are tied, the formula for

does not have the same result as the formula

for r and it is only approximate to r; the difference is negligible if there are no many tied ranks
-despite of the shortcomings of the Spearman method it is still commonly used because of its
computational simplicity