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MLS-C01 Exploratory Data Analysis Practice Question

During EDA, a data scientist discovers that two numerical features have a Pearson correlation coefficient of 0.95. Which action should the scientist take to avoid multicollinearity in a linear regression model?

Answer choices

Why each option matters

Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.

Correct answer & explanation

Remove one of the features

Pearson correlation of 0.95 indicates high multicollinearity, which can adversely affect linear regression by inflating standard errors. Removing one of the correlated features (Option A) is a straightforward solution to eliminate multicollinearity. Option B (PCA) reduces dimensionality but creates principal components that are linear combinations, losing interpretability; it also does not directly remove the original features. Option C (Ridge regression) applies L2 regularization to shrink coefficients, which can mitigate multicollinearity but does not remove it; simply removing one feature is simpler. Option D (polynomial features) would introduce more correlated terms, worsening multicollinearity. Option E (min-max scaling) does not affect correlation. Therefore, removing one feature is the best action.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

  • Remove one of the features

    Why this is correct

    Removing one feature eliminates multicollinearity and retains interpretability.

  • Apply PCA to the two features

    Why it's wrong here

    PCA reduces dimensionality but the components are not interpretable as original features.

  • Use Ridge regression to penalize coefficients

    Why it's wrong here

    Ridge regression is designed to mitigate multicollinearity by shrinking coefficients towards zero, but it does not remove features. With a correlation of 0.95, the features are highly redundant, and simply penalising their coefficients doesn't address the underlying issue of having two essentially identical predictors. Ridge regression is tempting because it is a standard technique for handling multicollinearity and is effective when you wish to retain all predictors, even if some are correlated.

  • Create polynomial features from the correlated pair

    Why it's wrong here

    Polynomial features increase correlation and multicollinearity.

  • Apply min-max scaling to both features

    Why it's wrong here

    Scaling does not affect correlation.

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