Dear all
I am new in the forum and I would like to ask you one question pertaining to the topic described above Principal Component analysis,not Partial,sorry for the mistake . Since I detected some collinearity in my independent variables and I ran the PCA methodology to try to handle this issue. In my case I had three independent variables and I ran the following regression "pca (my dependent var) (the three independent vars) . After that I obtained results which consisted of three components. My question is are those three obtained components signify the modified 3 independent variables in my list which are corrected for collinearity. And if that is the case , then eventually I should use the command ""predict pc1 pc2 pc3"" to obtain estimates for the 3 independent variables which I should then use in a regression. Can u please advise me if my logic and line of work is correct? I read many sources but it is a bit confusing to me how exactly I should implement this methodology in event study. Thank you very much for your attention and wish you a nice day.
Regards
Rosen
I am new in the forum and I would like to ask you one question pertaining to the topic described above Principal Component analysis,not Partial,sorry for the mistake . Since I detected some collinearity in my independent variables and I ran the PCA methodology to try to handle this issue. In my case I had three independent variables and I ran the following regression "pca (my dependent var) (the three independent vars) . After that I obtained results which consisted of three components. My question is are those three obtained components signify the modified 3 independent variables in my list which are corrected for collinearity. And if that is the case , then eventually I should use the command ""predict pc1 pc2 pc3"" to obtain estimates for the 3 independent variables which I should then use in a regression. Can u please advise me if my logic and line of work is correct? I read many sources but it is a bit confusing to me how exactly I should implement this methodology in event study. Thank you very much for your attention and wish you a nice day.
Regards
Rosen
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