I am conducting a CFA with 5 indicator variables. The theory suggests one or two-factor model, but with 5 indicators, only one-factor model would be viable.
The question is that the one-factor model fit poorly, but when allowing items 1 and 2 to be correlated, the model fit significantly improves and is now acceptable.
I'm trying to understand what does it mean to have two items that have correlated residuals. What are the next steps for the analysis? Should I try a bi-factor model instead? Should I remove one of the two items that have correlated residuals? Any suggestions would much appreciated. Thanks.