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I have a large dataset in which only Y and one of the independent variables are continuous. There are 12 binary independent variables and 2 other categorical independent variables (each with 8 categories).

I want to use the ACE algorithm to find the transformations. Should I consider all the independent variables for ACE? Do I need to transform binary/categorical variables?

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  • $\begingroup$ Please explain what you mean by "the transformations." It is rare for a numerical transformation of any binary variable to be meaningful. $\endgroup$ – whuber Mar 9 '18 at 16:24
  • $\begingroup$ thanks for your answer. the correlation between DV and the IVs is very low, however, based on the domain it should not. the adjusted R-squared for linear model is just 0.05 and I want to try using ACE to see if transformation can help. $\endgroup$ – Maryam Mar 9 '18 at 16:34
  • $\begingroup$ It won't help. For a list of just some of the things you might address to improve the model, see stats.stackexchange.com/questions/332430. $\endgroup$ – whuber Mar 9 '18 at 16:40
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Partially answered in comments:

Please explain what you mean by "the transformations." It is rare for a numerical transformation of any binary variable to be meaningful.

– whuber

( The correlation between DV and the IVs is very low, however, based on the domain it should not. The adjusted R-squared for linear model is just 0.05 and I want to try using ACE to see if transformation can help. – Maryam )

It won't help. For a list of just some of the things you might address to improve the model, see Variables supposed to be kept show low significance.

– whuber

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