REGRESSION ASSUPTIONS

Residual should be normally distributed follow bell curve. i.e. mea should be 0 and
variance should be 1.
Multicollinearity relationship between independent an dependent variable.
Heightened beta value

Take average to avoid multicollinearity. Median or mean or log of variables is

needed.

Variance is not constant. Variance should be constant across the data points .
hetrosictacity
Outliers could be a reason off fudged results. regression equation results in higher
values thus tapered forecasts at times outliers are needed depended on business
situation.
Adjusted r^2 will increases if the new variable added is significant and if not a
significant addition then then adjusted R^2 will decrease or be the same
If condition index is more than 20 then multicollinearity exists. Else insignificant
value exists
Variance inflation factor >2 great colliniearity
Tolerance is inverse of variance inflation factor
DURBIN WATSON >=2 Multicollinearity.
t-test also called student t test
PRINCPAL COMPONENT ANAYSIS PCA to make an index. Helps to give you the no.
it looks at the variance of the no. higher variance high sensitivity of index towards it
and less variance less sentivity