Apply principal components analysis to transform data.
Free SOA Exam PA (Predictive Analytics) lesson in Data Transformations and Unsupervised Learning Techniques. 12 min read, ~1,785 words.
PCA replaces correlated predictors with uncorrelated principal components ordered by variance explained. PC1 captures the most variance; each later PC captures the most of what remains, all mutually orthogonal. Standardize first (mean 0, variance 1) whenever variables use different units, or high-scale variables dominate. Loadings are the weights defining each...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 3b
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