Making use of multivariate distributions

Advanced Probability: Uncertainty in Data

Maarten Van den Broeck

Senior Content Developer at DataCamp

The role of probability and distributions in business decisions

  • Quantify uncertainty
  • Assess risks
  • Better data-driven choices

Person looking at data distributions

Advanced Probability: Uncertainty in Data

Course overview

Chapter 1

Advanced probability for business decisions

Chapter 2

Measuring and managing uncertainty

Chapter 3

Simulation techniques for decision support

Advanced Probability: Uncertainty in Data

Prerequisite knowledge and skills

Advanced Probability: Uncertainty in Data

Univariate distributions

  • Probabilities for a single variable
  • Summarize data and make informed decisions
  • However, real-world data is often more complex

An example univariate distribution

Advanced Probability: Uncertainty in Data

Multivariate distributions

  • Two or more variables interacting and changing together
  • Deeper insights into data

An example multivariate distribution

Advanced Probability: Uncertainty in Data

Joint probability

  • Value combinations of different variables at the same time
  • How likely are they to happen simultaneously?

Rain and umbrellas

Advanced Probability: Uncertainty in Data

Example: coffee shop

  • Understanding customer behavior
    • How much do customers spend?
    • How long do they stay?
  • Separately:
    • Average spend: $5
    • Average stay: 30 minutes
  • Together:
    • Customers who stay more than one hour spend 30% more

Preparing a cup of coffee

Advanced Probability: Uncertainty in Data

Example: coffee shop

Time Spent in Shop Average Spending ($)
< 30 minutes $5.00
30 - 60 minutes $6.00
> 60 minutes $6.50

$$ $$

  • Use to plan interventions: discounts, comfortable seating
Advanced Probability: Uncertainty in Data

Let's practice!

Advanced Probability: Uncertainty in Data

Preparing Video For Download...