Validity Concentration Formula Validation

Abstract

A formula for estimation of the validity concentration of a prediction model is specified, and its performance (ρcv and MSEcv) in tracking the accuracy of alternate non-OLS weighting methods (ridge regression, regression on principal components and equal weighting) was investigated. The performance of all alternate methods was tracked very accurately; the formula predicted performance perfectly (R2 = 1.0) for all three alternatives for both ρcv and MSEcv. The use of this validity concentration formula to help decide when to use a non-OLS method is thus deemed promising.