Factor analysis seeks to describe observed variables in terms of a smaller number of (unobservable) latent variables, or factors. Factor analysis is also known as common factor analysis and exploratory factor analysis. The factors are defined as linear combinations of the observed variables. They are constructed to explain variation that is common to the observed variables. A goal of factor analysis is to find a meaningful interpretation of the observed variables in terms of the unobserved factors. Another goal is to reduce the number of variables.

Figure 7.1 Rotated Factor Loading