FACTOR

ANALYSIS

Presented
By
Hassan
 MULTIVARIATE
ANALYSIS
Multivariate analysis in statistics describes a
collection of procedures which involve observation
and analysis of more than one statistical variable at a
time

All statistical methods that simultaneously analyze to

measurements on each individual or object under
investigation

Multivariate analysis used to measure, explain, and

predict the degree of relationship among variates
(combination of variables)

These analysis are being used widely around the

world.
Factor analysis was invented nearly 100 years
ago by psychologist Charles Spearman, who
hypothesized that the enormous variety of
tests of mental ability--measures of
mathematical skill, vocabulary, other verbal
skills, artistic skills, logical reasoning ability,
etc.--could all be explained by one underlying
"factor" of general intelligence
FACTOR
ANALYSIS
A statistical approach that can be used to analyze
interrelationships among a large number of variables
and to explain these variables in terms of their common
underlying dimensions (factors).

Factor analysis is a statistical method used to explain

variability among observed random variables in terms of
fewer unobserved random variables called factors

The statistical approach involving finding a way of

condensing the information contained in a number of
original variables into a smaller set of dimensions
(factors) with a minimum loss of information
FACTOR ANALYSIS
 Deals with the grouping of like variables in sets.
 Sets
are formed in decreasing order of
importance.
 Sets are relatively independent from each other.
 Commonly used factor analytic technique:
◦ The Exploratory technique
◦ The Confirmatory technique
 One of the most commonly used technique in
social and psychological sciences
EXPLORATORY FACTOR
TECHNIQUE
 This technique deals with exploring the
structure of the data.

 Thevariables involved under the study are

equally important.

 Variables are grouped together on the basis of

their closeness.

 Thistechnique exactly explains the

covariances of the variables.
CONFIRMATORY FACTOR
TECHNIQUE
• Assessing the degree to which the data meet
the expected structure

•Confirmatory factor technique is a theory-

testing model

• It is used to fine the correlation between the

variables in the form of matrix called
variance/covariance matrix

• By searching for the highest correlation

among the correlations of a variable with the
principal components, we know which variable
causes high overall variability in the data
TYPES OF FACTOR ANALYSIS
Two main types:

Principal component analysis -- this method provides a

unique solution, so that the original data can be
reconstructed from the results. It looks at the total variance
among the variables, so the solution generated will include
as many factors as there are variables, although it is unlikely
that they will all meet the criteria for retention. There is only
one method for completing a principal components analysis;
this is not true of any of the other multidimensional methods
described here.

Common factor analysis -- this is what people generally

mean when they say "factor analysis." This family of
techniques uses an estimate of common variance among the
original variables to generate the factor solution. Because of
this, the number of factors will always be less than the
number of original variables. So, choosing the number of
EXAMPLE OF FACTOR
ANALYSIS
"leadership" has been observed to be
composed of "task skills" and "people
skills" you are developing a new
questionnaire about leadership and you
create 20 items,10 will reflect "task"
elements and 10 "people" elements, When
you analyze your data, you do a factor
analysis to see if there are really two
factors, and if those factors represent the
dimensions of task and people skills. If
they do, you will be able to create two
separate scales, by summing the items on
each dimension. If they don't, well it's
back to the drawing board.
EIGENVALUES

Eigenvalues are a special set of scalars associated with a

linear system of equations(i.e., a matrix equation) that are
sometimes also known as characteristic roots, characteristic
values (proper values, or latent roots)

Eigenvalues are multipliers. They are numbers that

represent how much stretching has taken place or, in other
words, how much something has been scaled up by. In the
sentence 'I am 3.2 times taller than when I was born' the
number 3.2 is acting as an Eigenvalue

It represents the amount of variance accounted for by a

factor
STEPS IN CONDUCTING A FACTOR
ANALYSIS
There are four basic factor analysis steps:

• Data collection and generation of the

correlation matrix

• Extraction of initial factor solution

• Rotation and interpretation

• Construction of scales or factor scores to use

in further analyses
ADVANTAGES OF FACTOR
ANALYSIS
• Factor Analysis can be used to identify the
hidden dimensions or constructs which may or
may not be apparent from direct analysis.

• It is fairly easy to do, inexpensive, and accurate

• It is based on direct inputs from customers

• There is flexibility in naming and using

dimensions

• Data reduction.

• Construct a test instrument

ADVANTAGES OF FACTOR
ANALYSIS
• Discover and summarize pattern of
intercorrelations among variables.

• Reduction of number of variables, by

combining two or more variables into a
single factor

eg: performance at running, ball throwing,

batting, jumping and weight lifting could be
combined into a single factor such as
general athletic ability
DISADVANTAGES

• Usefulness depends on the researchers' ability to

develop a complete and accurate set of product
attributes - If important attributes are missed the value
of the procedure is reduced accordingly

• Naming of the factors can be difficult - multiple

attributes can be highly correlated with no apparent
reason.

• If the observed variables are completely unrelated,

factor analysis is unable to produce a meaningful pattern

• If sets of observed variables are highly similar to each

other but distinct from other items, Factor analysis will
assign a factor to them. It is not possible to know what
the 'factors' actually represent; only theory can help
inform the researcher on this
Example of Factor
Analysis
Suppose many species of animal (rats, mice, birds, frogs,
etc.) are trained that food will appear at a certain spot
whenever a noise--any kind of noise--comes from that
spot. You could then tell whether they could detect a
particular sound by seeing whether they turn in that
direction when the sound appears. Then if you studied
many sounds and many species, you might want to
know on how many different dimensions of hearing
acuity the species vary. One hypothesis would be that
they vary on just three dimensions--the ability to detect
high-frequency sounds, ability to detect low-frequency
sounds, and ability to detect intermediate sounds. On
the other hand, species might differ in their auditory
capabilities on more than just these three dimensions.
For instance, some species might be better at detecting
sharp click-like sounds while others are better at
detecting continuous hiss-like sounds
THANK
YOU