What is Exploratory Data Analysis

Tabel of the content

• What is Exploratory data analysis?
• Why is Exploratory analysis necessary?
• Principles that govern Exploratory data analysis
• How does Exploratory data analysis work?
• Wrapping Up

Exploratory data analysis is the first step in any data science project. It's where you get to know your data and learn what it can tell you. Data scientists use tools like R, Python, or SAS to analyze their data and look for patterns.

Exploratory data analysis is a powerful tool that helps you better understand your data and make decisions based on the insights it provides. But what is exploratory data analysis? And why should you use it in your work?

Read on to know more. 

What is Exploratory data analysis?

Exploratory data analysis is a process of examining the data to understand its structure, identify possible anomalies, and make predictions. In other words, it's a way of getting to know your data.

Data analysis starts with an idea about what you expect the data to look like, or what you'd like it to look like. Then you look at the actual dataset and see if those expectations are confirmed or not.

Exploratory data analysis is one of the most important steps in any project involving data. It helps us formulate research questions and hypotheses, as well as develop our analytical approach.

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One of the main tasks of exploratory data analysis is visualizing your data — looking at it in different ways so that patterns emerge and become clear. This helps us make sense of what we're seeing, which can lead us down new lines of inquiry that we might not have considered otherwise.

Why is Exploratory analysis necessary?

Exploratory data analysis can help you understand your data better by identifying unusual values and missing observations. You can also gain insight into how to best visualize your data or select the appropriate statistical tests to use.

Using exploratory analysis techniques will help you gain a better understanding of your data before you make any decisions based on it. Here are six reasons why exploratory data analysis is necessary:

1. Identify unexpected or unusual values

If there are any unexpected values in your data set, these should be investigated immediately. Unusual values may indicate errors in recording or transcription and should be investigated as soon as possible so that corrections can be made before any further analysis takes place.

2. Identify missing values

Missing values occur when there's an empty cell in the spreadsheet or database. When this happens, Excel can't calculate anything with that value, which means it will have to exclude it from the rest of your calculations. While this might seem like a minor inconvenience, it can actually be very problematic if you're trying to do any sort of statistical analysis of your data. If there are too many missing values in your dataset, then you won't be able to get meaningful results out of your calculations because they're missing too much information.

3. Spot patterns in the data

The main goal of the exploratory analysis is to spot patterns in the data. For example, you might discover that sales have increased by 5% over the last year, or that most customers are from California. These findings can help you formulate hypotheses about what's going on in your business and guide further analysis.

4. Identify outliers 

Outliers are values that are far from the rest of the data and may affect the results of your analysis. For example, if you have a group of people who have a high income but low spending habits, this would make them an outlier in a study about spending habits. It is important to identify these outliers because they can distort the results of your analysis.

5. Visualize data

Visualizing data helps you understand the structure of the data and provides an overview of the variables and their distributions. It also allows you to quickly identify missing values or outliers that may need further investigation.

6. Helps understand data set variables and their relationship with each other 

Correlation doesn't necessarily mean causation, but it can give you clues about what might cause changes in certain variables over time (or vice versa).  For example, if you track sales performance every month for 10 years and notice that sales are normally higher in January than any other month of the year, then there may be a correlation between sales performance and winter weather conditions in your area (although there may be other factors at play too).

Principles that govern Exploratory data analysis 

The process of exploratory data analysis is critical for researchers to understand the data set, but it is also a means for communicating with others about their findings. Here are some principles that govern exploratory data analysis:

1. The purpose of exploratory data analysis is to gain an understanding of the data set.

2. There is no one way to conduct exploratory data analysis; researchers should use whatever methods seem most appropriate for their research questions.

3. For any given research question, there may be more than one possible approach to conducting an exploratory data analysis.

4. It is important to develop an understanding of your data set before conducting any formal hypothesis testing or modelling; this is especially true when using complex statistical models such as multiple regression or structural equation modelling.

5. Exploratory data analysis should not be seen as an end in itself but rather as a means of developing theory and hypotheses that can then be tested formally with statistical tests and/or structural equation modelling. 

How does Exploratory data analysis work?

Exploratory data analysis is a critical step in the data science process and can be considered its first phase.

Exploratory data analysis is where you get your hands dirty with the data, and it involves a lot of different activities. Some people have called this phase “data munging” or “data cleaning”. 

EDA typically follows a process that consists of five steps:

1.  Explore your data visually with graphs and charts.

The first step in exploratory data analysis is to explore your data visually. It's often easier to spot patterns in the data when you can see it laid out in front of you. You'll want to look for any obvious errors or inconsistencies in the data, but also be on the lookout for anything interesting or surprising. Did one variable have no values that were zero? Did another variable appear to have a lot more extreme values than the rest? Are there any outliers?

2.  Discover clusters and outliers in your dataset using descriptive statistics (means, median, standard deviation, etc.).

In this step, you'll identify any unusual data points and outliers.

Clusters are groups of similar data points that you can easily distinguish from the others. An outlier is a single data point that appears to be different from the rest of the dataset.

To perform this step, you need to know how to find clusters and outliers using statistical methods like clustering algorithms. 

3.  Look for correlations between variables using scatterplots or line charts that display pairs of variables over time (e.g., sales revenue vs cost of goods sold).

Correlations between two variables tell us whether they tend to change together or separately over time. For example, if we see that the number of calls per day at a call centre correlates with the temperature outside, then we know that there is some connection between these variables even if we don't know exactly what it is yet. If we find that changes in one variable don't seem to affect another variable at all, then we have evidence against any causal relationship between them (for example, sales don't seem to be related to temperature).

4.  Identify correlations using multivariate regression analysis that includes several variables at once (e.g., average monthly temperature vs sales revenue).

Regression is a statistical technique for estimating the relationships between variables. In our case, we want to understand how each of our variables relates to the others.

The best way to do this is with a multivariate regression analysis, which involves running several regressions at once. The output of a multivariate regression analysis is a table that shows how each independent variable affects the dependent variable. It also indicates whether there are any significant relationships between the variables (i.e., whether they are correlated). 

5.  Use predictive analytics tools to predict future performance based on historical data

If you have enough historical data, you can use a predictive analytics tool (such as SAS or R) to predict future performance based on historical data. You can use these predictions as input in your model to predict sales of a new product. These predictions may be more accurate than those made by humans because they are based on actual data points instead of subjective opinions.

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Wrapping Up 

Exploratory data analysis (EDA) is a set of techniques used for analyzing large amounts of data that don't lend themselves to traditional statistical methods. This can be useful when you are looking at complex datasets with many variables or when you want to develop new predictive models from scratch.

Explore how it works in detail with the data science course offered by StarAgile. The data science certification will equip you with skills to analyze large datasets, build predictive models and extract actionable insights. The data science course also covers advanced topics such as data mining, machine learning, and artificial intelligence.