It was stated in Section 12.8 that centering reduces collinearity. As an illustration, consider the example of
Question:
(a) What is the correlation between X and X2? What are the VIFs of X and X2?
(b) Now suppose that we center X before squaring. What is the correlation between (X -) and (X-)2? What are the VIFs of (X -) and (X - )2?
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In the R code chap12R we perform the requested experiment an...View the full answer
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Related Book For 
Statistics And Data Analysis For Financial Engineering
ISBN: 9781461427490
1st Edition
Authors: David Ruppert
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