a. What is data transformation in the context of linear regression and why it is needed?...

a. What is data transformation in the context of linear regression and why it is needed?

b. Please list different transformation techniques with a brief explanation for each.

Solutions

Expert Solution

1) The most important criteria in linear regression is that X and Y variables must be linearly related. So when we plot a scatterplot they must show some linear relation among them. But when this is not true then we use data transformation where we try to transform either X or Y to bring that linear relation among them. Data transformation is simply used for this purpose.

2) One of the most used transformation is logarithm. When Y is exponential function of X then to bring linear relation between X and Y we take log of Y values.

One is square root transformation. When Y is function of square root of X then to bring linear relation we transform Y into square root of Y.

There are some standard transformation like 1/Y or 1/X which depends on relation between X and Y. The basic thing is we need to plot x and y values and see how is the relationship between them and according take transformation if needed.

orchestra answered 1 year ago

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