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Data & Analytics · Foundational

Outlier

An observation that lies unusually far from the other values in a dataset.

Definition

Outliers can be data errors, rare but valid events, or signs of a different process. They are detected with the IQR rule, z-scores (|z| > 3), box plots or model-based methods. Investigate them before removing, capping (winsorizing) or transforming them.

Exam tip

Don't delete outliers automatically; first determine whether they are errors or genuine values.

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