In the posts on multiple regression, analysis of variance and time series we came across three terms that seem made on purpose to scare the reader. Multicollinearity, heteroscedasticity, autocorrelation: if we want to convince someone that statistics is a dark and inaccessible subject, these are the magic words to say. 🙂
Surprise: behind the names there are three simple ideas, and above all three very concrete problems. To see them at work, let’s take the model that sooner or later anyone working in digital marketing builds: how many conversions does each euro spent on Google Ads and on Meta bring us? We’ll watch it fall into all three traps, one after the other, and learn how to recognise them and get out.
Continue reading “Multicollinearity, Heteroscedasticity, Autocorrelation: Three Difficult-Sounding Concepts Explained Simply (with an Example in R)”