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Module 3
Dependent variable
Regression
y = b0 + b1X
b0 (y intercept)
B1 = slope
= y/ x
Dependent variable
Observation: y
Prediction: 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.
Prediction error:
Observation: y
Prediction: y^
Zero
y=^
y+
Actual = Explained + Error
Dependent variable
Regression
Dependent variable
Calculating SSR
Population mean: y
Regression Formulas
The Total Sum of Squares (SST) is equal to SSR + SSE.
Mathematically,
^
2
SSR = ( y y ) (measure of explained variation)
^
SSE = ( y y )
SSR
SST
SSR
SSR + SSE
The value of R 2 can range between 0 and 1, and the higher its value
the more accurate the regression model is. It is often referred to as a
percentage.
SSE
n-k
y = A+ * x +
y
x
y = A + X + X + + k Xk +
Multicollinearity
Example table of
Correlations
Y
X1
1.000
X1
0.802
1.000
X2
0.848
0.578
X2
1.000
Nonlinear Regression