<ul><li>The Weight of Evidence (WOE) transformation is a technique used in credit scoring and logistic regression modeling.</li><li>WOE is calculated by taking the natural logarithm of the ratio between the distribution of good and bad instances for a category.</li><li>WOE can take positive, negative, or zero values and is used to create a new variable that replaces the original variable in the dataset.</li><li>For categorical variables with high cardinality, grouping categories and using decision tree algorithms can help optimize the WOE calculation.</li></ul>

Data Science Basics — (7) The Weight of Evidence (WOE) Transformation

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