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Unformatted text preview: series data) Why? To make sure that when you predict that future errors do not depend upon past errors. How? Check a plot of residuals against the time sequence and see if the pattern looks random. If you see a snake like pattern, you have evidence that the independence assumption is not true. You may also check the D-W statistic to see if it meets the guideline that it exceeds 1.3. Any value below 1.3 indicates that the independence assumption may not be true. 1. Checking for linearity Why? To make sure that a straight line is the type of equation that fits best. How? Check a plot of residuals against an independent variable and see if the pattern looks random. If you see a rainbow or smile shape, you have evidence that the linearity assumption is not true. To confirm, click on a point and add a polynomial trendline and check the R-Sq box. If R-sq < 0.20, the assumption is OK....
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This note was uploaded on 04/08/2011 for the course BUS 310 taught by Professor Abou-sayf,f during the Spring '08 term at University of Hawaii, Manoa.
- Spring '08