Last updated on May 17, 2024
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Z-Score Basics
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Mean Centering
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Min-Max Scaling
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Decimal Scaling
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Unit Vector Technique
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Robust Scaling
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Here’s what else to consider
In the realm of Business Intelligence (BI), standardization is a pivotal step for data comparison and analysis. Among the methods available, the z-score calculation stands out due to its unique approach. Unlike other standardization techniques, the z-score, also known as the standard score, quantifies how many standard deviations an element is from the mean of a dataset. This calculation provides a clear and precise picture of how data points relate to the norm within a set, which is crucial in identifying outliers and understanding overall data behavior in BI processes.
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- Johan Rojas Quality Engineer - LSSGB (In Process) - Big Data Expert - Project Management - SFC - SSYB - Agile - CSFPC
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1 Z-Score Basics
The z-score is calculated by subtracting the mean from an individual data point and then dividing the result by the standard deviation of the dataset. This formula transforms the dataset into a distribution with a mean of zero and a standard deviation of one. The z-score is especially useful because it allows for comparison across different datasets or variables, which might have different units or scales. This level of standardization is invaluable in BI when you need to compare data points that originate from diverse sources or distributions.
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2 Mean Centering
In contrast to the z-score, mean centering is another standardization method that involves only subtracting the mean from each data point. The result is a dataset centered around zero, but it retains the original standard deviation. Mean centering doesn't provide the normalized scale that z-scores do, which can be less informative for understanding the relative standing of each data point, particularly when comparing across different datasets in BI analytics.
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3 Min-Max Scaling
Min-max scaling is a method that rescales the data to a fixed range, typically 0 to 1. This is done by subtracting the minimum value from each data point and then dividing by the range of the dataset. While min-max scaling is useful for preserving the exact relationships between values, it doesn't handle outliers as effectively as the z-score method, which can be problematic in BI scenarios where outlier detection is important.
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4 Decimal Scaling
Decimal scaling standardizes by moving the decimal point of values of the dataset. The number of decimal places moved depends on the maximum absolute value in the dataset. Although this method normalizes data, it's not commonly used in BI due to its less intuitive nature and because it doesn't account for the distribution of data points as effectively as the z-score method.
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5 Unit Vector Technique
The unit vector technique normalizes data by converting values into a vector of length 1. Each data point is divided by the magnitude of all data points, which is calculated using Euclidean distance. This is particularly useful for data clustering and similarity comparisons in BI. However, unlike z-scores, it doesn't provide information about how many standard deviations a point is from the mean, which can be a valuable insight for certain analyses.
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6 Robust Scaling
Robust scaling uses the interquartile range to scale features. It subtracts the median and divides by the interquartile range, making it less sensitive to outliers than min-max scaling. While robust scaling is useful in datasets with many outliers, it doesn't standardize the dataset to a mean of zero and standard deviation of one like the z-score method, which can be more desirable in BI for comparing different datasets.
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7 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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- Johan Rojas Quality Engineer - LSSGB (In Process) - Big Data Expert - Project Management - SFC - SSYB - Agile - CSFPC
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La elección del método de estandarización depende del tipo de datos y del propósito del análisis. La puntuación z es potente para análisis estadísticos y comparaciones entre distribuciones, mientras que otros métodos como el escalado Min-Max y el escalado robusto son más adecuados para aplicaciones específicas en machine learning y datos con valores atípicos.
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