Question

X1 X2 Y X1 1.000 0.454 0.585 X2 0.454 1.000 0.342 Y 0.585 0.342 1.000 Explain...

X1 X2 Y
X1 1.000 0.454 0.585
X2 0.454 1.000 0.342
Y 0.585 0.342 1.000

Explain what multicollinearity means. Is there any multicollinearity in the multiple regression model? Explain how you know.

Math   Statistics-And-Probability   
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Answer #1

Large correlation between two or more independent variables in a multiple regression model could result in the problem of Multicollinearity. And in such a case we don't use that multiple regression model.

In this table there are two independent variables X1 and X2.

From given table, we get the correlation coefficient between x1 and x2 is 0.454. This correlation coefficient is not bery large, so we can says that there is not a presence of Multicollinearity between these variables.

Therefore, Inspection of the following table of correlation coefficients for variables in a multiple regression analysis reveals potential Multicollinearity with none of the two independent variables x1 and x2.

That means there is no Multicollinearity in the multiple regression model.

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