What is 'Multicollinearity'
Multicollinearity, in statistics, is the occurrence of several independent variables in a multiple regression model closely correlated to one another. Multicollinearity can cause strange results when attempting to study how well individual independent variables contribute to an understanding of the dependent variable. In general, multicollinearity can cause wide confidence intervals and strange P values for independent variables.
BREAKING DOWN 'Multicollinearity'
Multicollinearity suggests that several of the independent variables are closely linked in some way. Once the collinear variables are identified, it may be helpful to study whether there is a causal link between the variables. The simplest way to resolve multicollinearity problems is to reduce the number of collinear variables until there is only one remaining out of the set. Sometimes, after some study it may be possible to identify one of the variables as being extraneous. Alternatively, it may be possible to combine two or more closely related variables into a single input.

Variance Inflation Factor
A measure of the amount of multicollinearity in a set of multiple ... 
Variability
The extent to which data points in a statistical distribution ... 
Endogenous Variable
A classification of a variable generated by a statistical model ... 
Error Term
A variable in a statistical and/or mathematical model, which ... 
Heteroskedastic
A measure in statistics that refers to the variance of errors ... 
Coefficient of Determination
A measure used in statistical model analysis to assess how well ...

Trading
What's a Sensitivity Analysis?
Sensitivity analysis is used in financial modeling to determine how one variable (the target variable) may be affected by changes in another variable (the input variable). 
Trading
Using Trading Indicators Effectively
Select multiple indicators, avoid information overload and optimize indicators to effectively use technical analysis tools. 
Retirement
Variable Annuities: The Good, The Bad and the Ugly
An indepth guide to everything you need to know and watch out for with variable annuities. 
Retirement
How a Variable Annuity Works After Retirement
These investments can provide extra income after you retire. Here’s a guide to when and how you will receive the payout. 
Investing
Variable Costs
Variable costs go up when a company produces more goods or services, and go down when it produces fewer goods or services. This is compared to fixed costs, which do not change in proportion to ... 
Retirement
Variable Vs. Variable Universal Life Insurance
Do you know why you might need one policy versus the other? Read on to find out. 
Markets
Explaining Growth Rates
Growth rate refers to the amount a specific variable or measure has grown over a specified time, whether related to one company or an entire economy. 
Retirement
Variable Annuities: A Good Retirement Investment?
Variable annuities provide lifetime payments and taxdeferred growth, but – given their hefty fees – are they right for you? 
Personal Finance
Should Your 401(k) Be In An Annuity?
Housing your retirement plan inside a variable annuity contract offers some big advantages, but only if you are close to retirement. 
Investing
Pairs Trading: Correlation
Correlation is a term from linear regression analysis that describes the strength of the relationship between a dependent variable and an independent variable. Central to pairs trading is the ...

What variables are most important when making a prediction through sensitivity analysis?
Explore sensitivity analysis and how this method considers different variables to determine a course of action based on statistical ... Read Answer >> 
Which is wiser, rolling over my traditional IRA to variable annuity or vice versa? ...
I am 46 years old. I have a traditional IRA and Variable Annuity. What will it cost me to roll either way? ... Read Answer >> 
How should I interpret a negative correlation?
Learn more about correlation and how businesses analyze variables. Find out how negative correlations are interpreted by ... Read Answer >> 
What is the difference between direct costs and variable costs?
Learn about variable costs and direct costs, how direct costs and variable costs are classified and the differences between ... Read Answer >> 
What are the variables in variable costs?
Learn about variable costs. Explore how and why these costs may fluctuate, as well as ways in which they may differ from ... Read Answer >> 
How are variable annuities regulated?
Discover the various rules that the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority ... Read Answer >>