Intercorrelations

The intercorrelations among the predictors are useful for identifying multicollinearity in the regression. Variables that are highly correlated will lead to unstable regression estimates. However, due to their high correlation, omitting one of them from the model only minimally affects prediction. The variance in the response that can be explained by the omitted variable is still explained by the remaining correlated variable. However, zero-order correlations are sensitive to outliers and also cannot identify multicollinearity due to a high correlation between a predictor and a combination of other predictors.

Figure 1. Original predictor correlations
Original predictor correlations
Figure 2. Transformed predictor correlations
Transformed predictor correlations

The intercorrelations of the predictors for both the untransformed and transformed predictors are displayed. All values are near 0, indicating that multicollinearity between individual variables is not a concern.

Notice that the only correlations that change involve Package design. Because all other predictors are treated numerically, the differences between the categories and the order of the categories are preserved for these variables. Consequently, the correlations cannot change.

Next