What is the intuition behind variance decomposition?

Updated May 17, 2026

Short answer

Variance decomposition splits total variance into explained and unexplained components.

Deep explanation

Also known as ANOVA identity, Var(X)=E[Var(X|Y)] + Var(E[X|Y]). It separates variability due to randomness within groups and variability between group means, forming the basis of regression analysis.

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