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Linear Regression

Linear regression is a statistical method used to determine the relationship between a dependent variable and one or more independent variables. It involves calculating the slope and intercept to predict values, while minimizing the sum of squared errors. The method is commonly used for forecasting and assessing the strength of relationships between variables.

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4 views

Linear Regression

Linear regression is a statistical method used to determine the relationship between a dependent variable and one or more independent variables. It involves calculating the slope and intercept to predict values, while minimizing the sum of squared errors. The method is commonly used for forecasting and assessing the strength of relationships between variables.

Uploaded by

haricodingai
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Linear Regression

Regression
• A statistical measure that attempts to determine the strength of the
relationship between one dependent variable(y) and a series of other
independent variables(x1,x2,x3,………..).
Linear Regression
• The simplest mathematical relationship between two variables x and
y is a linear relationship
• Least square linear regression is a method for predicting the value of
a dependent variable y, based on the value of an independent varible
x
Slope & Intercept
• Slope :
The slope of a line is the change in y for a one unit increase in x.
• Y-intercept :
It is the height at which the line crosses the vertical axis and is
obtaining by setting x=0 in the equation
Error variable
Random error term:
1.The quantity € in the model equation is a random varible assumed to
be normally distributed with E(E)=0 and V(€)=σ 2
2.€-random deviation or random error term.
.The inclusion of the random error term allows (x,y) to fall either above
the true regression line (when €>0) or below the line (when €<0).
Least squares estimation of
beta_{0},beta_{1}
• beta_{0} =Mean response when x = 0 (y-intercept)
• beta_{1} = Change in mean response when x increases by 1 unit
(slope)
• Beta_{0}, beta_{1} are unknown parameters
• beta_{0} + beta {1}x = Mean response when explanatory variable
takes on the value x
• Goal: Choose values (estimates) that minimize the sum of squared
errors (SSE) of observed values to the straight-line
• The least squares estimate of the slope coefficient ẞ₁ of true
regression line is
β₁= Σ(Χ₁-Χ΄)(Υ₁-Υ') Σ (Χ-Χ΄) 2
• The least squares estimate of the intercept ẞo of true regression line
isβο = Υ' - β₁x
Most application of linear regression
• the goal is prediction, or forecasting, linear regression can be used to
fit a predictive model to an observed data set of y and X values.
• After developing such a model, if an additional value of X is then
given without its accompanying value of y, the fitted model can be
used to make a prediction of the value of y.
• Given a variable y and a number of variables X₁, ..., X, that may be
related to y, linear regression analysis can be applied to quantify the
strength of the relationship between y and the X₁, to assess which X₁
may have no relationship with y at all, and to identify which subsets of
the X contain redundant information about y.

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