Explain the Variance Inflation Factor (VIF) and its role in detecting multicollinearity.

  • Measure of how much the variance of an estimated coefficient increases when predictors are correlated
  • Measure of model complexity
  • Measure of model's fit
  • Measure of residual errors
VIF quantifies how much the variance of an estimated regression coefficient increases when predictors are correlated. A high VIF indicates multicollinearity, potentially affecting the model's stability.
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