Day 8 - Team H

Factor Analysis

Factor analysis is done to reduce the number of variables in any analysis;it is done by grouping similar variables together, forming a component. So, components are analysed at first level, and then to undertake further detailed analysis each component is studied separately.

Objectives of factor analysis:

1)      To reduce the number of variables

2)      To determine common underlying theme in the components or factors( group of Variables)

The factors are grouped together taking into account the correlated between them .i.e. the variables correlated to each other are placed together.

How to do factor analysis in SPSS

·         Go to: Analyse---Data Reduction—Factor—Select the factors

·         Select Extraction tab, ant then check the box against scree plot

·         Select Descriptive tab, and then  initial solution

·         Select Rotation, and then click the radio button against Verimax

Then a solution will be generated, which contains the tables, and graphs which can assist in factor analysis.

The tables, and the graphs generated are

·         Communalities

·         Component matrix

·         Rotated component matrix

·         Scree Plot

Some of the components are shown below:

Rotated Component Matrix(a)-Critical Element for Factor analysis

 

	Component
	1	2
Price in thousands	-.005	.924
Engine size	.498	.768
Horsepower	.221	.911
Wheelbase	.931	.040
Width	.779	.371
Length	.887	.104
Curb weight	.716	.585
Fuel capacity	.725	.486
Fuel efficiency	-.562	-.641

Extraction Method: Principal Component Analysis.

 Rotation Method: Varimax with Kaiser Normalization.

a  Rotation converged in 3 iterations.

Rotation: Tries to equalize the variance/Cumulative variance should remain same

3 Factors, on 3 axis of a cube, Variables mapped inside the box

Author: Nishant Lal