Graphics Reference
In-Depth Information
risk. Analyzing risk without graphs may lead to limited conclusions.
Graph-basedanalysiscanhelprevealhowriskexposuremayextendtoother
entities.
Optimizing Asset Mix
The objective of a
market basket analysis
is to understand which
products have a strong tendency to be purchased together. More generally,
this is a graph where you are looking for strong correlations between things,
which could be products purchased together, people who are popular at the
same time, stock prices that move together, actors who appear in movies
together, and so on.
Oneoldapproachtounderstanding thesecorrelationswastocreateamatrix
with each item listed in the columns and in the rows. The cells in the matrix
indicate the strength of the relationship between the pair of items. When
there are only a few items, the matrix can show all the possible connections
between any pair of products, as shown in
Figure 1-10
.
Figure 1-10:
This adjacency matrix shows how many times one product
purchase leads to the purchase of the second product.
Note
Chapter 7, “Point-and-Click Graph Tools,” discusses adjacency matrices
in a bit more detail.
As the number of products grows, however, the number of potential
connections is exponential. A matrix is less effective when looking at
hundreds of items. To address that we have put together visualizations for
problems which include analysis of market baskets of products at retail
