Factor Analysis

Question 1

What is FA?

Answer 1

A technique to overcome high complexity of large correlation matrices (R-matrix)

A way of reducing data to extract meaning by generating a set of smaller “latent variables” also known as factors

Question 2

What is a latent variable

Answer 2

A factor that is not directly observable, it has to be mathematically inferred by FA

Question 3

What are dimensions?

Answer 3

Items that correlate highly and account for variance —> factors

Question 4

How are factors labelled?

Answer 4

Given names to represent what the items have in common

Question 5

What is PCA?

Answer 5

Primary component analysis

Special case of FA

Factors = components

Question 6

What is factor loading?

Answer 6

Correlation between observed loading and the factor

Question 7

How is PCA formalised?

Answer 7

Yi = b1x1i + b2x2i …

Question 8

What does the b stand for in the formula?

Answer 8

It’s the weight that is generated by factor loading and is different for each factor

Question 9

What is the regression method?

Answer 9

Loadings are adjusted to account for initial correlation between variables