Suppose the Variance Inflation Factor (VIF) of a variable in your model is 10. What does this imply and what actions would you take?
- The variable is causing overfitting.
- The variable is highly correlated with other predictors.
- The variable is not correlated with other predictors.
- The variable is not important in predicting the output.
A high VIF value (generally greater than 5 or 10) indicates that a predictor is highly correlated with other predictors in the model. Actions to rectify this might include removing the variable from the model, combining it with other variables, or using techniques like PCA.
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