Keep reading for FREE

- We need to consider that our
**Error Term**is normally distributed. - We only need Normal Distribution while making
**Statistical Inferences**. - T-tests and F-tests work because we have assumed normality.
- If Error Term isn't normally distributed then we can use
**Central Limit Theorem**.

2

25 reads

MORE IDEAS ON THIS

To detect autocorrelation

- Plot all points and check for patterns or
- Use
**Durbin - Watson test**.

There is no remedy for Autocorrelation. Instead of linear regression, we can use

- Autoregressive Models.
- Moving Average Models.

2

17 reads

Ordinary least squares, or linear least squares, estimates the parameters in a regression model by minimizing the sum of the squared residuals.

2

93 reads

In order to prevent Heteroscedasticity, we need to

- Look for Omitted Variable Bias.
- Look for
**Outliers**. - Apply log Transformation.

2

21 reads

If the pattern doesn't looks like a Straight Line, then we need to apply

- A Non Linear Regression or
- Exponential Transformation or
- Log Transformation.

2

37 reads

- Technically, Endogeneity occurs when a
**predictor variable**(x) in a regression model is**correlated**with the**error term**(e) in the model. - This usually occurs due to the
*Omitted Variable Bias*(when we forget to include a releva...

2

26 reads

- If the
**Mean of the Error Terms**is not expected to be zero then the line is not the Best fitting one. - Having an Intercept Solves the problem.

2

24 reads

- Homoscedasticity means to have “
**Equal Variance**”. The error terms should have equal variance with one another. - When the error terms don’t have “Equal Variance”, then
**Heteroscedasticity**happens.

2

20 reads

OLS Assumptions are the **Conditions** that we need to consider them before performing **Regression Analysis**.

Some OLS Assumptions are:

- Linearity
- No Endogeneity
- Normality
- Zero Mean of Error Terms
- Homoscedasticity

2

63 reads

**Autocorrelation**is a mathematical representation of the degree of similarity between a given time series and a lagged version of itself over successive time intervals.- It is similar to the Correlation between two different
**Time Series**but Autocorrela...

2

19 reads

- A Linear Regression is Linear because the Equation is Linear.
- To verify the Linearity between Independent and Dependent Variable apply
**Scatter plot**. - If the Data points form a pattern that looks like a Straight Line then Linear Regression is Suitable.

2

40 reads

To fix Multicollinearity:

- If the Dataset is small, we can drop one independent variable. Or we can Transform them into One Variable (Eg. Average of two Variables)
- If the Dataset is large, we will use
**Ridge**and**Lasso**Regression.

2

21 reads

- We observe Multicollinearity when two or more
**Independent Variables**in a model are “**Highly Correlated**”. - Correlation could be
*Positive*(or)*Negative*. - This will lead result in less reliable predictions.
- Multicollineari...

2

19 reads

CURATED FROM

These are some of the Assumptions to be pondered while Applying Ordinary Least Square Method and Performing Regression Analysis.

“

More like this

Quételet, the mathematician turned astronomer who was performing social physics miracles as the central figure of Belgium science, got better in his game by learning probability theory and making use of his polymath brain. His work included estimations and calculations using the available data an...

Explore the World’s

Best Ideas

Save ideas for later reading, for personalized stashes, or for remembering it later.

Start

31 ideas

Start

44 ideas

# Personal Growth

Take Your Ideas

Anywhere

Just press play and we take care of the words.

No Internet access? No problem. Within the mobile app, all your ideas are available, even when offline.

Ideas for your next work project? Quotes that inspire you? Put them in the right place so you never lose them.

Start

47 ideas

Start

75 ideas

My Stashes

Join

2 Million Stashers

4.8

5,740 Reviews

App Store

4.7

72,690 Reviews

Google Play

samz905

Don’t look further if you love learning new things. A refreshing concept that provides quick ideas for busy thought leaders.

“

Shankul Varada

Best app ever! You heard it right. This app has helped me get back on my quest to get things done while equipping myself with knowledge everyday.

“

Ashley Anthony

This app is LOADED with RELEVANT, HELPFUL, AND EDUCATIONAL material. It is creatively intellectual, yet minimal enough to not overstimulate and create a learning block. I am exceptionally impressed with this app!

“

Sean Green

Great interesting short snippets of informative articles. Highly recommended to anyone who loves information and lacks patience.

“

Ghazala Begum

Even five minutes a day will improve your thinking. I've come across new ideas and learnt to improve existing ways to become more motivated, confident and happier.

“

Jamyson Haug

Great for quick bits of information and interesting ideas around whatever topics you are interested in. Visually, it looks great as well.

“

Giovanna Scalzone

Brilliant. It feels fresh and encouraging. So many interesting pieces of information that are just enough to absorb and apply. So happy I found this.

“

Laetitia Berton

I have only been using it for a few days now, but I have found answers to questions I had never consciously formulated, or to problems I face everyday at work or at home. I wish I had found this earlier, highly recommended!

“

Read & Learn

20x Faster

without

deep**stash**

with

deep**stash**

with

deep**stash**

Access to 200,000+ ideas

—

Access to the mobile app

—

Unlimited idea saving & library

—

—

Unlimited history

—

—

Unlimited listening to ideas

—

—

Downloading & offline access

—

—

Personalized recommendations

—

—

Supercharge your mind with one idea per day

Enter your email and spend 1 minute every day to learn something new.

I agree to receive email updates