STATISTICAL TECHNIQUES AND TOOLS
MULTIPLE REGRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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evaluate both the VIF and Tolerance
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always start by screening variables through a variable selection procedure
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evaluate either VIF or Tolerance
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closely examine all second-order terms in a model
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Detailed explanation-1: -Generally, a VIF above 4 or tolerance below 0.25 indicates that multicollinearity might exist, and further investigation is required. When VIF is higher than 10 or tolerance is lower than 0.1, there is significant multicollinearity that needs to be corrected.
Detailed explanation-2: -How do we measure Multicollinearity? A very simple test known as the VIF test is used to assess multicollinearity in our regression model. The variance inflation factor (VIF) identifies the strength of correlation among the predictors.
Detailed explanation-3: -The first simple method is to plot the correlation matrix of all the independent variables. The second method to check multi-collinearity is to use the Variance Inflation Factor(VIF) for each independent variable. More items