Is a mathematical approach which tries to differentiate between classes, categories or clusters or groups. It is mostly used for Credit Scoring or predicting bankruptcies. It partitions a sample into Yes or No groups, Positive and Negative, or Bullish and Bearish.
similar to regression, but predicts group membership rather than strength of association against a metric variable. This technique is a useful way to find the characteristics that best define differences across groups. It can also be used in conjunction with cluster analysis to derive equations that allow the segmentation to be applied consistently to future observations.
A regression technique for predicting a nominal outcome that has more than two values; a method used to classify subjects or objects into groups; also called discriminant function analysis.
A multivariate technique for analyzing the predictive value of a set of independent variables.
A statistical method based on maximum likelihood for determining boundaries that separate the data into categories.
A variation of multiple linear regression analysis for prediction of the occurrence or nonoccurrence of an event. To account for the nonnumerical nature of the predictand, a discriminant function is used as a type of regression function usually derived in such a way that positive values of the function correspond to "occurrence" and negative values to "nonoccurrence." In meteorology, for example, the occurrence of precipitation (the predictand) can be related to measures of vertical velocity, dewpoint temperature, pressure change, and other variables (the predictors) through a discriminant function. Values of the function above or below a threshold value (typically, zero) can be used to predict precipitation occurrence.
