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Statistical tools - an overview of the most important methods, techniques and concepts

02/22/2024 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

The statistical toolkit includes fundamental tools and concepts used in statistical analysis. Here are some key elements of the statistical toolkit:

1. Descriptive Statistics

Mean: Average values of a data set.

Median: The middle value in a sorted data set.

Standard Deviation: Measure of the spread of values around the mean.

2. Inferential Statistics

Significance Level: Threshold to determine the significance of results.

Confidence Interval: Interval for possible values of a parameter with a certain probability.

p-Value: Probability that the observed data is random when the null hypothesis is true.

3. Correlation Diagnosis

Correlation Coefficient: Measure of the strength and direction of the relationship between two variables.

Scatter Plot: Graphic representation of data points in a coordinate system.

4. Regression

Regression Analysis: Modeling the relationship between dependent and independent variables.

Residual Analysis: Checking the deviations between observed and predicted values.

Understanding and applying this statistical toolkit are crucial for meaningful data analysis and interpretation of results.

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What are the steps in the correlation diagnosis process?

02/22/2024 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

Steps of Correlation Diagnosis

Correlation diagnosis involves several steps to analyze the strength and direction of the relationship between two variables. Here are the basic steps of correlation diagnosis:

1. Data Collection

Collecting data for the two variables that are to be investigated for potential correlation.

2. Data Verification

Checking the data for completeness, accuracy, and consistency to ensure suitability for analysis.

3. Create Scatter Plot

Creating a scatter plot to visually depict the distribution of data points and potential patterns.

4. Calculate Correlation Coefficient

Calculating the correlation coefficient (e.g., Pearson correlation) to quantify the strength and direction of the linear relationship between the variables.

5. Significance Testing

Checking the significance of the correlation coefficient to determine if the observed correlation is statistically significant.

6. Interpretation

Interpreting the results and assessing the practical significance of the correlation in relation to the research question.

7. Robustness Check

Checking the robustness of the correlation against outliers or unusual data points.

8. Alternative Correlation Coefficient

Exploring other correlation coefficients (e.g., Spearman's rank correlation), especially if assumptions for the Pearson correlation coefficient are not met.

Carefully following these steps contributes to conducting a informed and reliable analysis of the correlation between variables.

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Basic Statistical Terms - An overview

02/22/2024 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

1. Population and Sample

Population: The entire set of elements of interest that is to be studied.

Sample: A subset of the population selected for a statistical investigation.

2. Mean (Average)

Mean: The sum of all values in a data set divided by the number of values.

3. Median

Median: The middle value in a sorted data set, dividing the data into two equal halves.

4. Standard Deviation

Standard Deviation: A measure of the spread or variance of data around the mean.

5. Variance

Variance: The average squared difference between each value and the mean.

6. Histogram

Histogram: A graphical representation of data showing the frequency of values in different intervals.

7. Regression

Regression: A statistical method to model the relationship between a dependent variable and one or more independent variables.

8. Significance Level

Significance Level: The threshold used to decide whether a statistical result is considered significant.

9. Correlation

Correlation: A measure of the statistical relationship between two variables.

10. Confidence Interval

Confidence Interval: An interval indicating the range of possible values for a parameter estimate with a certain probability.

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What is regression diagnostics?

02/22/2024 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

Regression diagnostics is a process used to assess the validity and accuracy of a regression model. Here are some key aspects of regression diagnostics:

1. Residual Analysis

Residuals: Residuals are the differences between the observed values and the predicted values of the model. Analyzing residuals helps identify patterns or systematic errors in the model.

2. Scatterplots

Scatterplots: Graphical representations, such as scatterplots of residuals against independent variables, can reveal outliers or non-linear relationships.

3. Normal Distribution of Residuals

Normal Distribution: Residuals should be normally distributed. Deviations from normal distribution may indicate issues in the model.

4. Homoscedasticity

Homoscedasticity: The variance of residuals should be constant. Changes in variance may suggest that the model is not equally suitable for all observations.

5. Multicollinearity

Multicollinearity: Check for high correlations between independent variables, as this can affect the stability of the model.

6. Influential Points

Influential Points: Identify observations that have a significant impact on the model's parameters. Outliers can strongly influence the results.

Regression diagnostics are crucial to ensure that a regression model is appropriate and reliable. It aids in identifying issues and optimizing model accuracy.

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What is the coefficient of determination (R²)?

02/22/2024 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

The coefficient of determination, also known as R² (R-squared), is a measure of the explanatory power of a regression model. It indicates how well the independent variable(s) explain the variation in the dependent variable. Here are some key points about the coefficient of determination:

1. Definition

Coefficient of Determination (R²): The coefficient of determination represents the proportion of the variance in the dependent variable explained by the independent variable(s) in the model. It ranges from 0 to 1, where 1 means the model explains all variations, and 0 means it explains none.

2. Interpretation

Interpretation: An R² of 0.75 would mean that 75% of the variation in the dependent variable can be explained by the independent variable(s) in the model.

3. Significance

Significance: A higher R² suggests that the model is better at explaining the variation in the dependent variable. However, it's important to consider other aspects of the model, such as residual analysis.

4. Limitations

Limitations: R² alone does not provide information about causation or the validity of the model. A high R² does not necessarily imply causality.

The coefficient of determination is a useful tool in regression analysis, but it's crucial to consider it in the context of other evaluation criteria for a comprehensive assessment of the model.

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