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May 12, 2015

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Multivariate Analysis

© All Rights Reserved

99 views

Multivariate Analysis

© All Rights Reserved

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ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT

FACULTY OF SOCIAL SCIENCES

DEI

ARVIND BANGER

It is used to simultaneously analyze more than two

variables on a sample of observations.

in a simplified way.

i.e. transform a mass of observations into a smaller

number of composite scores in such a way that

they may reflect as much information as possible

contained in the raw data obtained concerning the

research study

ARVIND BANGER

dependent?

YES

NO

Dependence

methods

Interdependence

methods

are dependent?

Metric?

ONE

Several

Is it metric?

YES

NO

Multiple

Regression

Multiple

discriminant

analysis

YES

YES

Factor

analysis

NO

Cluster

analysis

Metric

MDS

NO

Non-metric

MDS

Latent structure

analysis

Canonical analysis

MAV

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Explanatory Variable & Criterion Variable

described as explanatory variable and Y is described as

criterion variable. In some cases both explanatory variable

& criterion variable may consist of a set of many variables

in which case set (X1, X2, X3, ..Xp) may be called a set of

explanatory variables and the set (Y1, Y2, Y3, ..Yp) may be

called a set of criterion variables if the variation of the

former may be supposed to cause the variation of the latter

as whole.

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VARIABLES

Explanatory variables described above are supposed to be

observable directly in some situations, and if this is so,

the same are termed as observable variables. However,

there are some unobservable variables which may

influence the criterion variables. We call such

unobservable variables as latent variables.

VARIABLE

Discrete variable is that variable which when measured

may take only the integer value whereas continuous

variable is one which, when measured, can assume any

real value.

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DUMMY VARIABLE

algebraic manipulations in context of multivariate analysis.

We call Xi (i = 1,..,m) a dummy variable, if only one of Xi is

1 and the others are all zero.

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IMPORTANT MULTIVARIATE

TECHNIQUES

ARVIND BANGER

Through this method we classify individuals or objects

into two or more mutually exclusive & exhaustive

groups on the basis of a set of independent variables.

ARVIND BANGER

Contd

E.g. if an individual is 20 years old, has income of Rs 12,000

If b1, b2, b3 are the weights given to these independent

variables, then his score would be

Z=b1(20)+b2(12000)+b3(10)

ARVIND BANGER

FACTOR ANALYSIS

APPLICABLE WHEN there is systematic

and the researcher wants to find out something more

fundamental/latent which creates this commonality.

E.g. observed variables: income, education,

latent factor: social class

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10

i.e.

a large set of measured variables is resolved into

a few categories called

factors

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11

ANALYSIS

SCORE MATRIX

Measures (variables)

objects

a1

b1

c1

k1

a2

b2

c2

k2

a3

b3

c3

k3

aN

bN

cN

kN

ARVIND BANGER

12

FACTOR : It is an underlying dimension that account for

FACTOR LOADING : They are the values which explain

factors discovered. Its absolute size helps in interpreting

the factor.

COMMONALITY (h2) : It shows how much of each factor

h2 of the variable=(ith factor loading of factor A)2+(ith

factor loading of factor B)2

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13

Contd

EIGEN VALUE : It is the sum of squared values of the factor

importance of each factor in accounting the particular set

of variables being analyzed.

TOTAL SUM OF SQUARES : It is the sum of squared

FACTOR SCORES : These represent the degree to which

load high on each factor.

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14

Centroid method

Principal-components method

Maximum likelihood method

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15

CENTROID METHOD

This method tends to maximize the sum of loadings

ILLUSTRATION :

Given the following correlation matrix, R, relating to 8

variables with unities in the diagonal spaces. Work out

the first & second centroid factors:

ARVIND BANGER

16

Variables

1

Variables

0.709

0.204 0.051

0.22

1

ARVIND BANGER

0.022 0.798 0.613 0.111

1

1

0.12

0.891

0.12

0.152

0.152

17

SOLUTION:

various variables are taken as (+1) i.e. variables are

simply summed.

a)

correlation matrix are worked out.

The sum of these columns (T) is obtained.

The sum of each column obtained as per (a) is divided

by the square root of T obtained in (b), to get centroid

loadings. The full set of loadings so obtained constitute

the first centroid factor.( say A)

b)

c)

ARVIND BANGER

18

Variables

1

Variables

0.709

0.204 0.051

0.22

column sum(Si)

1

1

0.022 0.798 0.613 0.111

1

0.12

0.891

0.12

0.152

0.152

First centroid

factor A, Si /T

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19

1

0.693

0.618

0.642

0.641

0.629

0.694

0.679

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0.683

20

done for all possible pairs of variables resulting matrix is

named as Q1

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21

0.693

0.48

factor A

0.42

0.422

0.641 0.444 0.396 0.412 0.411 0.403 0.445 0.435 0.438

0.43

0.679 0.471

0.42

ARVIND BANGER

0.43

22

R, resulting in matrix of residual coefficients R1.

ARVIND BANGER

23

1

0.52

0.281 -0.24

-0.36

0.19

-0.37

-0.32 0.301

-0.34

0.23

3 -0.24

4 -0.36

0.192 -0.28

0.19

0.43

0.146 -0.37

-0.22 0.294

6 -0.37

0.33

7 -0.32

0.33

0.539 -0.31

-0.31 0.534

8 0.301 -0.23

-0.37

ARVIND BANGER

-0.35

24

of residual coefficients R1 as given below. Again the same method

is repeated to get the centroid factor B

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25

1

Variables

3*

4*

0.19

6*

7*

0.52

0.43

0.23

0.146 0.366

0.19

0.39

0.217 0.294

0.39

0.518

0.33

0.33

0.539 0.312

0.354

0.301

0.23

2.58

2.642

2.47

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26

Variables

Factor loadings

Centroid factor A

Centroid factor B

0.693

0.563

0.618

0.577

0.642

-0.539

0.641

-0.602

0.629

0.558

0.694

-0.63

0.678

-0.518

0.683

0.593

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27

Variables

Commonality(h2)

Factor loadings

Centroid factor A

Centroid factor B

A2+B2

0.693

0.563

0.797

0.618

0.577

0.715

0.642

-0.539

0.703

0.641

-0.602

0.773

0.629

0.558

0.707

0.694

-0.63

0.879

0.678

-0.518

0.729

0.683

0.593

0.818

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28

Proportion of variance

Variables

Factor loadings

Commonality(h2)

Centroid factor A

Centroid factor B

Eigen value

3.49

2.631

6.121

Proportion of

0.44

0.33

0.77

total variance

[44%]

[33%]

[77%]

Proportion of

0.57

0.43

common variance

[57%]

[43%]

[100%]

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29

PRINCIPAL-COMPONENTS METHOD

This method seeks to maximize the sum of squared loadings

of each factor .Hence the factors in this method explain more

variance than the loadings obtained from any other method of

factoring.

Principal components are constructed which are linear

combination of given set of variables.

p1 = a11X1+a12X2+.+a1nXn

p2= a21X1+a22X2+.+a2nXn

and so on till pn

The aijs are called loadings and worked out in such a way that

PC are uncorrelated(orthogonal) and first PC has maximum

variance.

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30

ILLUSTRATION:

Take the correlation matrix R for 8 variables and compute:

(i) the first two principal component factors.

(ii) the communality for each variable on the basis of said

two component factors.

(iii) the proportion of total variance as well as the proportion

of common variance explained by each of the two

component factors.

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SOLUTION:

As the correlation matrix is positive manifold we work out the

1st principal component factor as follows:

The vector of column sums is referred to as Ua1 and when it

To normalize: square the column sums in Ua1 and then

divide each element in Ua1 by the square root of the sum of

squares.

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32

Variables

1

Variables

0.709

0.204 0.051

0.22

1

1

0.022 0.798 0.613 0.111

1

0.12

0.891

0.12

0.152

0.152

Va1

=

Ua1/normalizing

factor

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33

Normalizing factor:

={(3.622)2+(3.263)2+(3.392)2+(3.385)2+(3.324)2+(3.666)2+(3.587)2+

(3.605)2}

=9.868

Ua2 : [1.296, 1.143, 1.201, 1.201, 1.165, 1.308,1.280, 1.275]

Normalizing it we obtain:

Va2 : [0.371, 0.327, 0.344, 0.344, 0.344, 0.374,0.366,0.365]

Va1 and Va2 are almost equal i.e. convergence has occurred .

Finally we compute the loadings as follows:

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34

Variables

(Characteristic

vector Va1)

normalizing

factor

Principal

of Ua2

component

0.371

1.868

0.69

0.331

1.868

0.62

0.334

1.868

0.64

0.343

1.868

0.64

0.337

1.868

0.63

0.372

1.868

0.70

0.363

1.868

0.68

0.365

1.868

0.68

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35

obtain centroid factor B earlier) to get:

Variables

Principal component

II

1

0.57

0.59

-0.52

-0.59

0.57

-0.61

-0.49

-0.61

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36

Variables

Principal components

commonality(h2)

II

I2+II2

0.69

0.57

0.801

0.62

59

0.733

0.64

-0.52

0.68

0.64

-0.59

0.758

0.63

0.57

0.722

0.7

-61

0.862

0.68

-0.49

0.703

0.68

-0.61

0.835

Eigen value

3.4914

2.6007

6.0921

Proportion of

0.436

0.325

0.761

total variance

43.6%

32.5%

76%

Proportion of

0.537

0.427

1.00

57%

43%

100%

common varianceARVIND

BANGER

37

If Rscorrelation matrix actually obtained from data in

sample

& Rpcorrelation matrix obtained if entire population is

tested.

then ML method seeks to extrapolate what is known in Rs

in the best possible way to estimate Rp.

ARVIND BANGER

38

CLUSTER ANALYSIS

Unlike techniques for analyzing relationship between

people, events or objects into homogenous subgroups.

STEPS:

Selection of sample to be clustered (buyers, products etc.).

Definition of the variables on which to measure the

objects, events etc. (e.g. market segment characteristics,

product competition definitions etc.)

Computation of similarities among entities (through

correlation, euclidean distances, and other techniques)

Selection of mutually exclusive clusters(maximisation of

within cluster similarity and between cluster differences).

Cluster comparison & validation.

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39

A minivan buyers

B sports car buyers

Income

Age

Family size

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40

This creates a special description of a respondents perception about

difficult to measure construct like product quality.

Method:

multidimensional space

1. Objective space :object positioned in terms of measurable attributes

like objects weight, flavor and nutritional value.

2. Subjective space : perceptions about objects flavor, weight and

nutritional value.

3. Preference space: describes respondents preferences using objects

attributes (ideal point).All objects close to this ideal point are

interpreted as preferred .

Ideal points from many people can be positioned in this preference

space to reveal the pattern and size of preference clusters. Thus

Cluster analysis and MDS can be combined to map market

segments and then examine product designed for those segments.

ARVIND BANGER

41

CONJOINT ANALYSIS

Used in market research & product development

3 prices, 3 brands, 3 speeds, 2 levels of educational values, 2

categories of games, & 2 categories of work assistance, then

model will have (3*3*3*2*2*2)=216 decision levels

Objective of Conjoint analysis is to secure Utility Scores, that

represent the importance of each aspect of the product in

buyers overall preference rating.

Utility Scores are computed from buyers ratings of set of

cards . Each card in the deck describes one possible

configuration of combined product attributes.

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42

Select the attribute most pertinent to the purchase

decision (called factor).

Find the possible values of attribute (called factor

levels).

After selecting the factors and their levels SPSS determines

the No. of product descriptions necessary to estimate the

utilities. It also builds a file structure for all possible

combinations , generate the subset required for testing ,

produce the card description and analysis the results.

ARVIND BANGER

43

THANK YOU

ARVIND BANGER

44

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