Linear Regression | What is Auto-Correlation in Linear Regression assumption
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Answer ( 1 )
Autocorrelation occurs when the residual errors are dependent on each other.
The presence of correlation in error terms reduces the model’s accuracy.
This mostly occurs in time series models where the next value is dependent on
previous value. In other words, the value of y(x+1) is not independent from the value
of y(x).