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Regression
Dependent variable
B1 = slope
= ∆y/ ∆x
b0 (y intercept)
Observation: y
Zero
Independent variable (x)
The function will make a prediction for each observed data point.
The observation is denoted by y and the prediction is denoted by y. ^
Simple Linear Regression
Prediction error: ε
Observation: y
Prediction: y^
Zero
y=y+ε ^
Dependent variable
The Sum of Squares Regression (SSR) is the sum of the squared differences
between the prediction for each observation and the population mean.
Regression Formulas
Mathematically,
SSR = ∑ ( y – y ) ^(measure
2
of explained variation)
SSE = ∑ ( y – y ) ^
(measure of unexplained variation)
2
SST = SSR + SSE = ∑ ( y – y ) (measure of total variation in y)
The Coefficient of Determination
The proportion of total variation (SST) that is explained by the regression (SSR) is
known as the Coefficient of Determination, and is often referred to as R .
2
R = =
2 SSR SSR SST
SSR + SSE
The value of R can range between 0 and 1, and the higher its value the more
2
accurate the regression model is. It is often referred to as a percentage.
Standard Error of Regression
Standard Error is calculated by taking the square root of the average prediction
error.
SSE
Standard Error =
√ n-k
y=A+β*x+ε
β is the per unit change in the dependent variable for each unit change in the
independent variable. Mathematically:
∆y
β=
∆x
Multiple Linear Regression
More than one independent variable can be used to explain variance in the
dependent variable, as long as they are not linearly related.
y = A + β X + β1 X1 + … + β k Xk + ε
2 2
Example table of
Correlations
Y X1 X2
Y 1.000
X1 0.802 1.000
X2 0.848 0.578 1.000
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.982655 Y = B0 + B1 X1 + B2X2 + B3X3 - - - +/- Error
R Square 0.96561 Total = Estimated/Predicted +/- Error
Adjusted R Square 0.959879
Standard Error 26.01378
Observations 15
ANOVA
df SS MS F Significance F
Regression 2 228014.6 114007.3 168.4712 1.65E-09
Residual 12 8120.603 676.7169
Total 14 236135.2
Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%
Intercept 562.151 21.0931 26.65094 4.78E-12 516.1931 608.1089
Temperature -5.436581 0.336216 -16.1699 1.64E-09 -6.169133 -4.704029
Insulation -20.01232 2.342505 -8.543127 1.91E-06 -25.1162 -14.90844