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Introduction to R for Business Intelligence

You're reading from   Introduction to R for Business Intelligence Profit optimization using data mining, data analysis, and Business Intelligence

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Product type Paperback
Published in Aug 2016
Publisher Packt
ISBN-13 9781785280252
Length 228 pages
Edition 1st Edition
Languages
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Author (1):
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Jay Gendron Jay Gendron
Author Profile Icon Jay Gendron
Jay Gendron
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Table of Contents (13) Chapters Close

Preface 1. Extract, Transform, and Load FREE CHAPTER 2. Data Cleaning 3. Exploratory Data Analysis 4. Linear Regression for Business 5. Data Mining with Cluster Analysis 6. Time Series Analysis 7. Visualizing the Datas Story 8. Web Dashboards with Shiny A. References
B. Other Helpful R Functions C. R Packages Used in the Book
D. R Code for Supporting Market Segment Business Case Calculations

Checking model assumptions


To use linear regression, your data must satisfy the following four core assumptions:

  • Linearity

  • Independence

  • Normality

  • Equal variance

It may be helpful to think of these assumptions by their first letters. You can remember that LINE is an important aspect of linear regression. Next, you will learn about each of the assumptions as well as tests that you can perform in R to check whether the data satisfies them.

Note

Learn more: Checking the assumptions of a statistical model is important. The power and accuracy of any model comes from its adherence to the assumptions. David Robinson (2015) has written a blog called VARIANCE EXPLAINED that describes this topic in an enjoyable way: http://varianceexplained.org/r/kmeans-free-lunch/

Linearity

Note

Linearity assumption: The relationship between the predictor and response variables is linear.

In an SLR situation, a quick way to determine linearity is to plot the variables with a scatterplot. Earlier, you saw a strong correlation...

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