How does the z-score calculation differ from other standardization methods? (2024)

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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6

Robust Scaling

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7

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

    How does the z-score calculation differ from other standardization methods? (3) 1

How does the z-score calculation differ from other standardization methods? (4) How does the z-score calculation differ from other standardization methods? (5) How does the z-score calculation differ from other standardization methods? (6)

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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How does the z-score calculation differ from other standardization methods? (2024)

FAQs

What is the difference between standardized and z-scores? ›

This process of converting a raw score into a standard score is called standardizing or normalizing (however, "normalizing" can refer to many types of ratios; see Normalization for more). Standard scores are most commonly called z-scores; the two terms may be used interchangeably, as they are in this article.

Why do z-scores and other standard scores allow us to make comparisons across different samples? ›

Z-scores are standardized scores that identify and describe the exact location of every score within a distribution. By transforming our values (raw score) we can compare z-scores across different samples or groups and make meaningful comparisons.

What are the advantages of the z-score sometimes called the Standardised score or Standardised value being a pure number and not having a unit of measurement? ›

The standard score (more commonly referred to as a z-score) is a very useful statistic because it (a) allows us to calculate the probability of a score occurring within our normal distribution and (b) enables us to compare two scores that are from different normal distributions.

How does z-score differ from standard deviation? ›

Key Takeaways

Standard deviation defines the line along which a particular data point lies. Z-score indicates how much a given value differs from the standard deviation. The Z-score, or standard score, is the number of standard deviations a given data point lies above or below mean.

What is the z-score standardized method? ›

z = ( x − X ¯ ) S . z-scores measure the distance of a data point from the mean in terms of the standard deviation. This is also called standardization of data. The standardized data set has mean 0 and standard deviation 1, and retains the shape properties of the original data set (same skewness and kurtosis).

What does a standardized z-score tell you? ›

A z-score is a statistical measurement that tells you how far away from the mean (or average) your datum lies in a normally distributed sample.

Why are using z-scores better than using the actual mean and standard deviation of a set of data? ›

A z-score indicates the number of standard deviation a score falls above or below the mean. Z-scores allow for comparison of scores, occurring in different data sets, with different means and standard deviations.

What is the difference between the standardized normal distribution used for tests with Z and the T distribution? ›

What's the key difference between the t- and z-distributions? The standard normal or z-distribution assumes that you know the population standard deviation. The t-distribution is based on the sample standard deviation.

What are the disadvantages of the z-score method? ›

The z-score is particularly easy to calculate and interpret. However, it also has its disadvantages, as it is, for example, very dependent on the population parameter and is also sensitive to outliers. Other statistical measures can also be used, such as the t-score or confidence intervals.

What is a significant difference between z-scores? ›

a z-score less than or equal to the critical value of -1.645. Thus, it is significant at the 0.05 level. z = -3.25 falls in the Rejection Region. A sample mean with a z-score greater than or equal to the critical value of 1.645 is significant at the 0.05 level.

What does the z-score tell us? ›

A z-score tells us the number of standard deviations a value is from the mean of a given distribution.

What is the difference between z-score and normal distribution? ›

The standard normal distribution, also called the z-distribution, is a special normal distribution where the mean is 0 and the standard deviation is 1. Any normal distribution can be standardized by converting its values into z scores. Z scores tell you how many standard deviations from the mean each value lies.

Is standardized test statistic the same as z-score? ›

The z-score, also called a test statistic, should be calculated, and the results and conclusion stated. A z-statistic, or z-score, is a number representing how many standard deviations above or below the mean population a score derived from a z-test is.

Is standard error the same as z-score? ›

The standard error of mean is a type of Z-score that's useful when you have multiple sets of data. While a typical Z-score isn't a standard deviation measurement, the standard error of a mean is a Z-score that represents the standard deviation of the means from your various data sets.

Are standard scores also called z-scores? ›

A z-score measures the distance between a raw score and a mean in standard deviation units. The z-score is also known as a standard score since it enables comparing scores on various variables by standardizing the distribution of scores.

What is the difference between Z and T standard score? ›

Key Differences Between Z score vs T score

Z score is the standardization from the population raw data or more than 30 sample data to a standard score, while the T score is the standardization from the sample data of less than 30 data to a standard score.

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