Personal tools
 

Linear Regression and Multiple Regression

Linear Regression_012924A
Linear Regression - Towards Data Science]


- Overview

Linear regression is a popular modeling technique that explains the relationship between variables, like correlation, and provides an equation that can predict the value of a response variable based on a value of the predictor variable. 

Please refer to the following for more information:

 

- Simple Linear Regression and the Slope-Intercept Form

Simple linear regression aims to find a linear relationship to describe the correlation between an independent and possibly dependent variable. The regression line can be used to predict or estimate missing values, this is known as interpolation.

In math, the slope-intercept form is a way to write the equation of a straight line using the line's slope and y-intercept. The equation for simple linear regression is Y = a + bX, where X is the independent variable, Y is the dependent variable, b is the slope, and a is the intercept. The intercept is the value of Y when X = 0, and the slope is b. 

The equation can be interpreted as follows:

  • Y: The predicted value of Y
  • a: The intercept, which predicts where the regression line will cross the Y-axis
  • b: Predicts the change in Y for every unit change in X

 

Simple linear regression is a statistical method you can use to quantify the relationship between a predictor variable and a response variable. 

 

- The Least Squares Regression Line (LSRL) 

The least squares regression line (LSRL) is a straight line that minimizes the sum of the squared residuals between the data points and the LSRL. The LSRL is also known as the line of best fit or trend line. 

The least squares method is a form of mathematical regression analysis used to determine the line of best fit for a set of data, providing a visual demonstration of the relationship between the data points. 

Each point of data represents the relationship between a known independent variable and an unknown dependent variable. This method is commonly used by statisticians and traders who want to identify trading opportunities and trends.

 

[More to come ...]



Document Actions