Correlation — Economics STD 11 Commerce — Question

Rank coefficient differs from pearsonian correlation coefficient because in rank coefficient, specific ranks are assigned to the data which leads to loss of information and all the information regarding the data is not utilised. Only if the data in the rank coefficient method is ranked precisely, it leads to similar values as the pearsonian coefficient. The value of rank coefficient also differs due to the first differences of the value of items in the series arranged are almost never constant. Generally, both the methods result in same value of ‘r’, but pearsonian coefficient is more widely used than rank coefficient as it utilizes information from the whole series of frequency distribution.