Multicollinearity assignment

multicollinearity assignment

Multicollinearity- when two or more independent variables of a multiple regression model are highly correlated. 

     In the Pueblo real estate data Improvement value and total value are highly correlated (0.93637)and land value and total value also correlate(0.46456). this is because the total value is the land and improvement values added together. If you took out either total value or land and improvement value, it would produce a more accurate model.

Other correlations: Total Rooms with bedrooms (0.7940127) Total sqft with first floor and other finished area (both around .7) and Total sqft with above first floor area (0.63174). 

Pg. 598 #3

 multicollinearity assignment
  My final answer came out with a r value of .18, and an F stat of 7.04

    I took out Total assets, Total Revenue, and Return on Equity. they had higher correlations and were not very significant in the model. 

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