Why 3 component PCA was used for purchase data?
We used 3 component PCA for purchase data as we did for segmentation data. My question is that why we did not check for the explained variance of 3 components before applying PCA. Could we use higher components to account for more variability?
1 answers ( 0 marked as helpful)
Hi Dikshit,
thanks for reaching out! We looked at the cumulative variance graph and saw that if we keep 3 of the components we keep around 80% of the variance. So, using the rule of thumb we decide to keep the first 3 components. We could also have a 4 components solution, then we'd keep almost 90% of the variance. One of the assignments is to segment the dataset using the 4 components solution. Here's a snip of the graph in question:
Hope this helps!
Best,
365 Eli