Many analysts have difficulty in defining the neighborhood for their analysis. The neighborhood you define should match the question you are asking. For example, a study of obesity in California counties would need a large neighborhood due to the size of counties. However, a study of real estate sales for a metro area would need a much smaller neighborhood. If you are unsure of the distance to use for the neighborhood calculation, the Optimized Hot Spot Analysis tool will calculate the optimized neighborhood along with simplifying and optimizing some of the other input parameters. For example, it tosses out outliers. However, keep in mind that it automatically uses FIXED_DISTANCE as its conceptualization of spatial relationship, and this may not be appropriate in your particular study. In this exercise, you'll learn how to use the Optimized Hot Spot Analysis tool to determine hot and cold spots of residential real estate sales...