I'm trying to run a multivariate regression in which not all variables are independent, and an not sure if this is possible.
The reason is as follows: Let's say we have a large number of contracts, and we want to know how likely they are to default, based on a number of factors (age of the person, etc)
I have a history of contracts, and I want to run a regression on them. Three of the possible variables are: Date of origin Date of default Age of contract at default
Now clearly age is a factor of the date of origin and default, but I don't know if it defaulted because "it was 5 years old" or because it was 2008 and was a bad year.
Can I run them as if they were independent? If not what is the best prectice?
Many thanks!