Spearman’s rank correlation was developed by the British psychologist C.E. Spearman. It is used when the variables cannot be measured meaningfully as in the case of price, income, weight, etc. The ranking may be more meaningful when the measurements of the variables are suspect.
There are also situations when you are required to quantify qualities such as fairness, honesty, etc. Ranking may be a better alternative to the quantication of qualities. Moreover, sometimes the correlation coefficient between two variables with extreme values may be quite different from the coefficient without the extreme values. Under these circumstances, rank correlation provides a better alternative to simple correlation.
Rank correlation coefficient and simple correlation coefficient have the same interpretation. Its formula has been derived from simple correlation coefficient where individual values have been replaced by ranks. These ranks are used for the calculation of correlation. This coefficient provides a measure of linear association between ranks assigned to these units, not their values. It is the Product Moment Correlation between the ranks.
