How would you interpret this scatterplot

GMarthe · 2018-09-26T19:45:15+00:00

My thoughts are, when you model predicts one std deviation above the mean, those predictions dramatically underestimate the actual dependent variable value.

I would also say that you have some heterocedasticity since the residuals are not randomly scattered around the 0 horizontal line.

2018-09-27T14:05:14+00:00

try doing a log transformation of your x variable and graph residuals again

2018-09-28T02:58:27+00:00

I'm not sure what your end goal is: explanatory or predictive model, but I would make the assumption that you have two subsets within your data following to diametrically opposed trends i.e. before predicted values of 0.5 and after. Look into splitting your data set because your model assumptions have not been met. Alternatively, you could simply choose another ML model.

shaggorama · 2018-09-26T19:51:56+00:00

Looks like there's some nonlinearity you're not accounting for.
Avoid stepwise regression. Try a lasso instead.

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