how to fix multicollinearity
one of the most common ways of eliminating the problem of multicollinearity is first to identify collinear independent predictors and then remove one or more of them generally in statistics a variance inflation factor calculation is run to determine the degree of multicollinearity an alternative method for fixing multicollinearity is to collect more data under different conditions noted technical analyst john bollinger creator of the bollinger bands indicator wrote that a cardinal rule for the successful use of technical analysis requires avoiding multicollinearity amid indicators to solve the problem analysts avoid using two or more technical indicators of the same type instead they analyze a security using one type of indicator such as a momentum indicator and then do a separate analysis using a different type of indicator such as a trend indicator tradingviewfor example stochastics the relative strength index rsi and williams r wm r are all momentum indicators that rely on similar inputs and are likely to produce similar results in the image above the stochastics and wm r are the same so using them together doesn t reveal much in this case it is better to remove one of the indicators and use one that isn t tracking momentum in the image below stochastics show price momentum and the bollinger band width shows price consolidation before price movement tradingview