# Difference between revisions of "Categorical Variable"

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A '''Categorical Variable''' in the context of [[Quantitative Risk Management]] is any variable that ranges along a finite number of possible values. Categorical variables can be used in the representation of a [[Risk Model]], encoding [[Explanatory Variables]], [[Risk Factor]] or [[Risk Metric]] | A '''Categorical Variable''' in the context of [[Quantitative Risk Management]] is any variable that ranges along a finite number of possible values. Categorical variables can be used in the representation of a [[Risk Model]], encoding [[Explanatory Variables]], [[Risk Factor]] or [[Risk Metric]] | ||

− | Numerical Variables can be converted to | + | [[Numerical Variable | Numerical Variables]] can be converted to categorical variables of the Ordinal variety via various discretization (binning) methods |

[[Category:Quantitative Tools]] | [[Category:Quantitative Tools]] |

## Latest revision as of 16:06, 10 September 2019

## Definition

A **Categorical Variable** in the context of Quantitative Risk Management is any variable that ranges along a finite number of possible values. Categorical variables can be used in the representation of a Risk Model, encoding Explanatory Variables, Risk Factor or Risk Metric

Numerical Variables can be converted to categorical variables of the Ordinal variety via various discretization (binning) methods