Principal component analysis of event-related potentials: a note on misallocation of variance.

Wood and McCarthy (1984) found a 'misallocation of variance' when applying PCA, including Varimax rotation, to simulated data. Here it is demonstrated that this effect can be produced by Varimax rotation, without PCA as an intervening step. PCA does not distort or lose information when extracting components, since it is shown that the prototypes may be perfectly reconstructed from the unrotated solution. However, it is stressed that infinitely many sets of prototypes may render the same final solution, a fact which cannot be overcome by any method. The role of the rotation step within this framework is discussed.