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    This document contains a correlation matrix showing the relationships between residuals, earnings before tax, operating margin, and pre-tax margin. It notes that since all correlations between residuals and other variables are close to 0, there is no evidence of endogeneity. It also notes that the correlation between pre-tax margin and operating margin is greater than 0.8, indicating evidence of multicollinearity between those two variables.

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    This document contains a correlation matrix showing the relationships between residuals, earnings before tax, operating margin, and pre-tax margin. It notes that since all correlations between residuals and other variables are close to 0, there is no evidence of endogeneity. It also notes that the correlation between pre-tax margin and operating margin is greater than 0.8, indicating evidence of multicollinearity between those two variables.

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    37 views2 pages

    Excel

    Uploaded by

    api-661897146
    This document contains a correlation matrix showing the relationships between residuals, earnings before tax, operating margin, and pre-tax margin. It notes that since all correlations between residuals and other variables are close to 0, there is no evidence of endogeneity. It also notes that the correlation between pre-tax margin and operating margin is greater than 0.8, indicating evidence of multicollinearity between those two variables.

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    of 2

    ResidualsEarnings BeforeOperating

    Tax Margin
    Pre-Tax Margin
    Residuals 1
    Earnings Before Tax -1.91E-16 1
    Operating Margin 6.2485E-17 -0.1310473 1
    Pre-Tax Margin 8.5958E-18 -0.06074508 0.87457256 1

    Check for Endgenuity: Since the correlation between the residuals and x-variables are all very close

    Check for Multicollinearity: Since the correlation between pre-tax margin and operating margin is
    variables are all very close to 0, we do not have evidence of endogenuity

    n and operating margin is more than 0.8, we do have evidence of multicollinearity between those two variables

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