Barclays Interview Questions | R Square

Question

What happens when we add a variable and it increases the R-Sq but decreases the Adj R-Sq?

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Dhruv2301 4 years 3 Answers 996 views Great Grand Master 0

Answers ( 3 )

  1. Ognish
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    Adjusted R-squared, a modified version of R-squared, adds precision and reliability by considering the impact of additional independent variables that tend to skew the results of R-squared measurements.

    if the variable is a non-significant one, the Adjusted R-squared value will decrease.

  2. anmol
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    when a new variable is added to the prediction model and the variable is a non-significant one, the Adjusted R-squared value will decrease.

  3. Prerana
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    R^2 tends to increase every time we add more variables, it considers that more the variable more will be the information. Whereas, in R^2_adj it check for the contribution of variable to the output variable.
    1.If the variable is contributing to the output then it will Increase
    2. If the variable is not contributing to the output then it will decrease
    or remain same
    R^2 does not take number of variables into consideration whereas R^2_adj considers that and gives better information

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