Correlation in Credit Scoring

This video discusses the concept of correlation in the context of credit scoring. It explains how correlation measures the relationship between two variables and how it can be used to understand the factors that influence creditworthiness.
The video covers two main types of correlation:
1. *Pearson correlation:* Measures the linear relationship between two continuous variables. It is suitable for normally distributed data and assumes a linear relationship between the variables.
2. *Spearman rank correlation:* Measures the monotonic relationship between two variables. It is suitable for non-normally distributed data and can handle non-linear relationships.
The video also demonstrates how to apply these correlation methods to credit scoring data. It shows how to calculate correlation coefficients, interpret the results, and use them to identify important factors that influence creditworthiness.
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