1. Examples of multicollinearity
Survival analysis
Multicollinearity may represent a serious issue in. The problem is that time-varying covariates may change
their value over the time line of the study. A special procedure is recommended to assess the impact of
multicollinearity on the results.
Interest rates for different terms to maturity
In various situations it might be hypothesized that multiple interest rates of various terms to maturity all
influence some economic decision, such as the amount of money or some other financial asset to hold, or
the amount of fixed investment spending to engage in. In this case, including these various interest rates will
in general create a substantial multicollinearity problem because interest rates tend to move together. If in
fact each of the interest rates has its own separate effect on the dependent variable, it can be extremely
difficult to separate out their effects.