One of the most challenging aspects of multivariate data is the sheer complexity of the information. If you have a dataset with 100 variables, how do you make sense of all the interrelationships present? Even with 20 variables, there are 190 pairwise correlations to consider when you’re trying to understand how the individual variables relate to one another. Two related but distinct methodologies for exploring and simplifying complex multivariate data are principal components and exploratory factor analysis.
Principal components analysis (PCA) is a data-reduction technique that transforms a larger number of correlated variables into a much smaller set of uncorrelated variables called principal components. For example, you might use PCA to transform 30 correlated (and possibly redundant) environmental variables into 5 uncorrelated composite variables that retain as much information from the original set of variables as possible.