Archive for March, 2012

Small github reorginization

March 28th, 2012 Comments off

Modeling Trick: the Signed Pseudo Logarithm

March 1st, 2012 Comments off

Much of the data that the analyst uses exhibits extraordinary range. For example: incomes, company sizes, popularity of books and any “winner takes all process”; (see: Living in A Lognormal World). Tukey recommended the logarithm as an important “stabilizing transform” (a transform that brings data into a more usable form prior to generating exploratory statistics, analysis or modeling). One benefit of such transforms is: data that is normal (or Gaussian) meets more of the stated expectations of common modeling methods like least squares linear regression. So data from distributions like the lognormal is well served by a log() transformation (that transforms the data closer to Gaussian) prior to analysis. However, not all data is appropriate for a log-transform (such as data with zero or negative values). We discuss a simple transform that we call a signed pseudo logarithm that is particularly appropriate to signed wide-range data (such as profit and loss). Read more…