Quantitative Business Analysis (QBA 501)

Block 1 Slides

Dr. Keith Whittingham

Module Layout
QBA 501
Descriptive Statistics Probability & Distributions Statistical Inference
Data, Tables & Graphs
Graphical Techniques

Regression Analysis

Types of Data

Pivot Tables

Summary Data

Central Location

Rank and Order

Dispersion

Boxplots

Learning Objectives Displaying Data

Understand types of data Create and interpret histograms Understand relationships among data

through scatterplots Understand time series plots Manipulating data with pivot tables

Types of Data

There are several ways to categorize data.

Numerical (quantitative) versus categorical (qualitative) Cross-sectional versus time series

Numerical Data

Quantitative values Real numbers Arithmetic calculations valid Examples

Income levels Product weights Sales revenue Production rate

Numerical Data

Can be Continuous or Discrete Continuous

Infinite number of possible values No gaps in possible values Gaps in possible values

Discrete

Categorical Data

Categorical quality of an observation Mutually exclusive Collectively exhaustive Examples

Eye color blue, brown, etc Size of customer small, medium, large

Categorical Data

Can be Nominal or Ordinal Nominal

Named category as variable Name can be a number Category identifies ranked order of values

Ordinal

Observations

An observation is a member of the population or sample. Each row corresponds to an observation. In this data set, each person represents an observation.

Variables

A variable is a specific attribute being observed/measured. Each column represents a variable. In this data set, each of the six pieces of information about a person is a variable.

Numerical versus Categorical - continued

Some options for this example are to:

code Gender (1 for male and 2 for female) uncode Opinion variable categorize the Age variable as young (34 or younger), middle aged (from 35-59) and elderly (60 or older).

There is no right or wrong way Dealers choice.

Cross-sectional versus Time Series

Cross-sectional data

All variables measured at one point in time snap shot Coding.xls is cross-sectional; other examples? Measure one or more variables at successive points in time. Time-series examples?

Time-series data

Module Layout
QBA 501
Descriptive Statistics Probability & Distributions Statistical Inference
Data, Tables & Graphs
Graphical Techniques

Regression Analysis

Types of Data

Pivot Tables

Summary Data

Central Location

Rank and Order

Dispersion

Boxplots

Frequency Tables and Histograms

Display how many observations fall within a category or range of values

Can be used for qualitative or quantitative values

Hard part is choosing categories (classes or bins)

Too many, or too few, and we lose meaningful information in the data.

Guidelines for bins/classes

Should be mutually exclusive Should be collectively exhaustive 8-15 bins works best Should have equal widths (round numbers better, e.g. 5, 10, 100, etc, )

For Quantitative categories:

Frequency Distribution

Lets explore some common distribution shapes

Otis Elevators

Data consists of the diameter (in inches) of 400 elevator rails measured by Otis Elevators. The diameters range from a low of approximately 0.449 inch to a high of approximately 0.548 inch.

What type of distribution?

Symmetric Histograms

A histogram is symmetric if it has a single peak and looks approximately the same to the left and right of the peak.

Bank Customer Arrivals

Data consists of the time between customer arrivals - called interarrival times - for all customers on a given day.

What type of distribution?

Positively Skewed Histograms

A histogram is positively skewed or skewed to the right if it has a single peak and the values of the distribution extend much farther to the right of the peak than to the left of the peak.

Accounting Midterm Grades

Data consists of the midterm grades for a large class of accounting students.

What type of distribution?

Negatively Skewed Histograms

A histogram is negatively skewed or skewed to the left if its longer tail is on the left.

Otis Elevators 2

Data consists of the diameters of all elevator rails produced on a single day at Otis Elevators. Otis uses two machines to produce elevator rails.

Too few bins

Bimodal Distributions

Some histograms have two or more peaks. This indicates that the data comes from two or more distinct populations. The result in this case is a bimodal distribution. Other multimodal distributions exist trimodal, etc.

Pie Chart

Cousin of the Histogram Visualize frequency as a proportion of the entire data set.

Scatterplots

We are often interested in the relationship between two variables. Plot a point for each observation, where the coordinates represent the values of the two variables. The resulting graph is a scatterplot.

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Scatterplots

After constructing a scatterplot, we can examine the scatter of points. We look for any relationship between the two variables. Direction: Is there a tendency for one variable to move in concert with, or in opposition to, the other variable? Strength: Are the points tightly clustered around an imaginary straight line? Or are they more broadly scattered?

Time Series Plots

When we need to forecast future values of a time series, it is helpful to create a time series plot. This is essentially a scatterplot, with the time series variable on the vertical axis and the time itself on the horizontal axis. Also, to make patterns in the data more apparent, the points are usually connected with lines.

Analyzing a Time Series Plot

When looking at a time series plot we usually look for two things:

Is there an observable trend or cycle? That is, do the values of the series tend to increase (an upward trend) or decrease (a downward trend) over time? Or cycle up and down? Is there a seasonal pattern? For example, do the peaks or valleys for quarterly data tend to occur every fourth observation?

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Time Series Plots with two Variables

Note that you can use different vertical scales for each variable. This can yield time based relationships between variables in a manner similar to a scatterplot for cross-sectional data.

Module Layout
QBA 501
Descriptive Statistics Probability & Distributions Statistical Inference
Data, Tables & Graphs
Graphical Techniques

Regression Analysis

Types of Data

Pivot Tables

Summary Data

Central Location

Rank and Order

Dispersion

Boxplots

Pivot Tables

One of Excels most powerful tools. Pivot tables allow us to slice and dice the data. Statisticians often refer to the resulting tables as contingency tables or crosstabs.

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Creating a Pivot Table

Position the cursor in the data range. On the Insert ribbon, select the Pivot

Table drop-down. or chart.

Select whether you want a pivot table

With the chart, you get the table for free.

Creating a Pivot Table -continued

Next specify the range of the data set. Then specify where you want to place

the pivot table and/or chart.

Creating a Pivot Table -continued

PivotTable button on the Insert ribbon.

Source and destination dialog box.

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Creating a Pivot Table -continued

There are two ways to proceed in the

next step.

Firstly, you can check the box on the pivot

table field list to populate the table.

Alternatively, you can drag the variable

names to the appropriate field area in the pivot table field list.

Blank Pivot Table

Creating a Pivot Table -continued

The Field List window the destination labels depend on whether you chose a table or chart Here is the correspondence: Axis Fields correspond to Row Labels Legend Fields correspond to Column Labels

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Pivot Table Summary

The best way to learn the full power of Pivot Tables is to get in and play. The automatic link to the charts is very powerful, you can jump back and forth to view the impact of your actions. Finally, you can manipulate pivot charts just like any other Excel charts.

Module Layout
QBA 501
Descriptive Statistics Probability & Distributions Statistical Inference
Data, Tables & Graphs
Graphical Techniques

Regression Analysis

Types of Data

Pivot Tables

Summary Data
Dispersion & Association

Central Location

Rank and Order

Boxplots

Learning Objectives Displaying Data

Understand types of data Create and interpret histograms Understand relationships among data

through scatterplots Understand time series plots Manipulating data with pivot tables

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