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edited example usage more explanation
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awlh18 committed Jan 25, 2025
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4 changes: 3 additions & 1 deletion docs/example.ipynb
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"Multicollinearity exists when two or more explantory variables in a regression model are correlated. High degree of multicolinearity in a regression model is problematic as it can make coefficient estimates unstable. In the case where there is perfect correlation between two explanatory variables, it can even cause a regression model to fail as it will be impossible to assess how the target variable is affected by a unit change in an explantory variable when holding all other explantory variables constant. \n",
"\n",
"Multicollinearity can be checked through the Variance Inflator Factors (\"VIF\"). VIF of a given explanatory variable $X_i$ is computed by $\\frac{1}{(1 - R^2_{X_i, ... X_-i})}$ where $R^2_{X_i, ... X_-i}$ is the coefficient of determination from regressing $X_i$ against all other explanatory variables. Another way of detecting multicollinearity is to obtain the pairwise correlation between explanatory variables.\n"
"Multicollinearity can be checked through the Variance Inflator Factors (\"VIF\"). VIF of a given explanatory variable $X_i$ is computed by $\\frac{1}{(1 - R^2_{X_i, ... X_-i})}$ where $R^2_{X_i, ... X_-i}$ is the coefficient of determination from regressing $X_i$ against all other explanatory variables. Typically VIFs between 1 and 5 suggest that there is moderate correlation, but it is not severe enough to warrant any corrective measures. However, VIFs greater than 5 represent critical levels of multicollinearity where the coefficients will be poorly estimated. \n",
"\n",
"Another way of detecting multicollinearity is to obtain the pairwise correlation between explanatory variables. Correlation close to -1 or 1 suggests severe multicollinearity. \n"
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{

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