Practical Predictive Analytics

Data transformations

When you are dealing with continuous skewed data, consider applying a data transformation, which can conform the data to a specific statistical distribution with certain properties. Once you have forced the data to a certain shape, you will find it easier to work with certain models. A simple transformation usually involves applying a mathematical function to the data.

Some of the typical data transformations used are log, exp, and sqrt. Some work better for different kinds of skewed data, but they are not always guaranteed to work, so it is always best practice to try out several basic ones and determine if the transformation becomes workable within the modeling context. As always, the simplest transformation is the ...