Question

Describe how we balance factor loadings with the number of components we retain?

Answer 1

SOLUTION:

From given data,

Describe how we balance factor loadings with the number of components we retain?

The factor loadings give us some indication, which of the underlying factors appear in which of your observed variables.

So each component that you extract from the PCA is build of the factors or the variables that contributes to the variation captured by each component.

So each component has factor loadings that helps us in analyzing the business meaning of each component of PCA.

Example a PCA of customer segments might have factor loadings of latitude, longitude , and area variables that tells us that these factor loadings are responsible for the exhibited behaviour of the PCA and PCA1 is related to geological space and can be called as geospatial component.