BASICS OF MULTIVARIATE

ANALYSIS (MVA)
 Multivariate analysis deals with the statistical analysis of data collected on more than one
dependent variable.

 These variables may be correlated with each other, and their statistical dependence is often taken
into account when analysing such data.

 Is used when the phenomenon under study cannot be explained by a single variable.

 It lets us predict the effect a change in one variable will have on other variables.

 Multivariate analysis provides a more accurate depiction of the behaviour of data that are highly
correlated, and can indicate when there are potential problems in a system or process.
 EXAMPLE
 44% of male applicants are admitted by a school, but only 33% of female applicants .
 Does this mean there is unfair discrimination?
 Schools investigates and breaks down figures for Engineering and English programs.

SIMPSON’S PARADOX
MALE FEMALE

ACCEPT 35 20

REFUSE ENTRY 45 40

TOTAL 80 60
 No relationship between sex and acceptance for either programme
– So no evidence of discrimination.
 Why?
– More females apply for the English programme, but it is hard to get into.
More males applied to Engineering, which has a higher acceptance rate
than English.
 Must look deeper than single cross-tab to find this out.

ENGINEERIN MALE FEMALE ENGLISH MALE FEMALE

G
ACCEPT 30 10 ACCEPT 5 10

REFUSE 30 10 REFUSE ENTRY 15 30

ENTRY
TOTAL 60 20 TOTAL 20 40
 CLASSIFICATION OF MVA
 Multivariate techniques in the case of data containing both dependent and independent
variables are called dependency techniques.
• Multiple regression analysis
• Discriminant analysis
• Multivariate analysis of variance
• Canonical analysis
 Multivariate techniques in the case of data containing several variables without designating
any dependency relationship is called interdependency techniques.
• Factor analysis
• Cluster Analysis
• Multidimensional scaling
 MULTIPLE REGRESSION
 Multiple regression generally explains the relationship between multiple independent or
predictor variables and one dependent or criterion variable.
 A dependent variable is modelled as a function of several independent variables with
corresponding coefficients, along with the constant term.
   Multiple regression requires two or more predictor variables, and this is why it is called
multiple regression.

 The multiple regression equation explained above takes the following form:

y = b1x1 + b2x2 + … + bnxn + c.

Where Y = value of dependent variable to be estimated.
b1,b2,b3… bn = regression coefficients associated with each independent variable.
C= constant
 DISCRIMINANT ANALYSIS
 Discriminant Analysis finds a set of prediction equations based on independent variables that
are used to classify individuals into groups.
 There are two possible objectives in a discriminant analysis:
 finding a predictive equation for classifying new individuals or interpreting the predictive
equation to better understand the relationships that may exist among the variables.
Discriminant equation

 Di = score of discriminant function

 d0 = Is constant
 di ‘s = weighting coefficients
 X’s are the values of the discriminating variables used in analysis
 MULTI VARIATE ANALYSIS OF
VARIENCE (MANOVA)
 MANOVA assess the relationship between two or more dependent variables and categorical
variables or factors.

 E.g.: used to test the differences among the samples of employees, customers, manufactured
products etc.

 MANOVA allows us to test hypotheses regarding the effect of one or more independent

variables on two or more dependent variables.

 Multivariate analysis of variance (MANOVA) is simply an ANOVA with several dependent

variables. That is to say, ANOVA tests for the difference in means between two or more
groups, while MANOVA tests for the difference in two or more vectors of means.
 CONJOINT ANALYSIS
 Conjoint analysis is a survey-based statistical technique used in market research that helps
determine how people value different attributes (feature, function, benefits) that make up
an individual product or service.

 it is one of the most effective models in extracting consumer preferences during the
purchasing process.

 This data is then turned into a quantitative measurement using statistical analysis. It

evaluates products or services in a way no other method can.

 It is also known as trade-off analysis.

 FACTOR ANALYSIS
 Factor analysis involves grouping similar variables into dimensions.  This process is used to
identify latent variables or constructs. 

 The purpose of factor analysis is to reduce many individual items into a fewer number of
dimensions. 

 Factor analysis can be used to simplify data, such as reducing the number of variables in
regression models.

 Application of Factor analysis is that it is used to verify scale construction and to construct
indices.
 CLUSTER ANALYSIS
 Cluster analysis or clustering is the task of grouping a set of objects in such a way that
objects in the same group (called a cluster) are more similar (in some sense) to each other
than to those in other groups (clusters).
 It identifies homogeneous subgroups or clusters of individuals or objects based on a set of
characteristics.
 It is Used in market segmentation.
 The result of a cluster analysis shown as the colouring of the squares into three clusters.
 MULTI DIMENSIONAL SCALING
(MDS)
 Multidimensional scaling (MDS) is a technique that creates a map displaying the relative
positions of a number of objects, given only a table of the distances between them.

 The map may consist of one, two, three, or even more dimensions.

 Measure an item in more than one dimension at a time.

 The items that are perceived to be similar will fall close together on the perceptual map and
the items that are perceived to be dissimilar will be farther apart.
An example of classical multidimensional scaling applied to voting patterns in
the United States House of Representatives. Each red dot represents one
Republican member of the House, and each blue dot one Democrat.
 APPLICATIONS OF MVA
 Consumer and market research.

 Quality control and quality assurance across a range of industries such as food and beverage,
paint, pharmaceuticals, chemicals, energy , telecommunication etc.

 Process optimization and process control.

 Research and development.

 Data mining.