👉 Homoscedasticity is a statistical concept in econometrics that describes how the variance of a set of random variables decreases as their standard deviation increases. This means that as one variable becomes more and more dependent on another, its effect diminishes proportionally to its original value. For example, consider two independent random variables X and Y with variances σ2X and σ2Y respectively. If both X and Y are homoscedastic, then their sum, Z = X + Y,
