Solved – the effect of having skewed dependent variable on scatterplot result

least squaresscatterplotsmoothing

The histogram of my dependent variable is as following:

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I draw the scatter plot of my dependent variable and independent variable, and the result is as following picture? I am wondering if the skewness of the dependent variable may affect the result. It seems that the relationship is not linear and we have a lot of outliers!

enter image description here

Best Answer

This means that your estimates of Sales as a function of Mvisits are more accurate for low values of Sales. You can see that reflected in the confidence bands around the smoothing regression (the red curvy line), which are relatively narrow for average Sales $\le$ 30, but widening quite a bit thereafter.

Of course the histogram of Mvisits is also skewed to the right, so taken together this means your data are giving you a reliable idea about how these two variables relate only for low values of each.