If the correlation between the two independent variables of a regression analysis is 0.11 and each independent variable is highly correlated to the dependent variable, what does this indicate?
A) Multicollinearity between these two independent variables.
B) Negative relationship is not possible.
C) Only one of the two independent variables will explain a high percent of the variation.
D) An effective regression equation.

Question

Quizplus · Accepted Answer

A correlation of 0.11 between two independent variables is not considered to be high, and therefore, it is unlikely that there is significant multicollinearity between the independent variables. Additionally, the fact that each independent variable is highly correlated with the dependent variable suggests that there is a strong relationship between the variables, indicating that an effective regression equation can be created. Therefore, choice D, an effective regression equation, is the best choice.

If the Correlation Between the Two Independent Variables of a Regression