What is linear regression?
Linear regression is a type of statistical analysis that tries to show a relationship between two variables. Linear regression looks at different data points and draws a trend line. Linear regression can create a predictive model of seemingly random data that shows data trends such as cancer diagnoses or stock prices.
Linear regression is an important tool in analytics. The technique uses statistical calculations to draw a trend line in a set of data points. The trend line could range from the number of people diagnosed with skin cancer to a company's financial performance. Linear regression shows a relationship between an independent variable and a dependent variable being examined.
There are a number of ways to calculate linear regression. One of the most common is the common least squares method, which estimates unknown variables in the data, which is visually converted to the sum of the vertical distances between the data points and the trend line.
The calculations to perform linear regressions can be quite complex. Fortunately, linear regression models are included in most major calculation packages such as Excel, R, MATLAB, and Mathematica.