Analyzing Qualitative Variables
Numerical methods:
- Descriptive statistics
- Correlation
- Histograms
- Box Plots
- Time series plots
- Scatter plots
Example: Concept of risk and return in finance
- Investment performance (expectation: high return of we’re willing to take a higher degree of risk)
- Customer valuations (casino guests à some are the high rollers who are expected to spend a lot of money during their visit, so a high expected return but high risk due to variation)
- Product demand (extremely popular products may not always sell well)
- Employee performance
Stock returns that have been pulled for Verizon in 2019 and displayed as histograms.
Here, the height of the histograms represent how frequently a given return in observed.
