Question

	GMAT	Cash	Gender	Degree
GMAT	1
Cash	0.100745	1
Gender	-0.22375	0.078179	1
Degree	-0.24514	0.087861	-0.08607	1

Am interested to know whether there is multicollinearity between GMAT, cash, Gender and Degree. Here is the correlation table. If the threshold is >+0.35 and <-).35 for multicollinearity, my conclusion is:

a.) all the Xs are independent

b.) none of the Xs are independent

c.) only 2 of the Xs are independent

d.) only 1 x is independent

Answer 1

It is given that the threshold for multicollinearity is correlation value less than -0.35 or more than +0.35.

This means if the correlation is less than -0.35, we will consider multicollinearity and if correlation is more than +0.35, then we will also consider multicollinearity between variables.

In the table, we can see that none of the correlation is less than -0.35 or more than +0.35

Therefore, we can say that there is no multicollinearity.

Option A is correct because all variables are independent and there is no multicollinearity