Regression Analysis

REGRESSION
• Regression analysis is the process of developing a
statistical model, which is used to predict the value of a
dependent variable by at least one independent
variable.
• In a simple regression analysis, there are two types of
variables
– Dependent Variable: The variable whose value is
influenced or to be predicted. It is called regressed or
explained variable.
– Independent variable: The variable which influences the
value or is used for prediction. It is also called regressor or
predictor or explanatory variable
Simple linear regression analysis is focused on developing a
regression model by which the value of the dependent
variable can be predicted with the help of the
independent variable.
•
• From the following data
 REGRESSION
• A random sample of eight drivers insured with a company
and having similar auto insurance policies was selected. The
following table lists their driving experiences(in years) and
monthly auto insurance premiums.

Predict the monthly auto insurance premium for a driver with 10

years of driving experience.
• b= -1.5476
• a= 76.6605
• Regression equation:
• Y= 76.6605-1.5476X
• When X=10, THEN
• Y= 76.6605-1.5476x10= 61.68
 CORRELATION VS REGRESSION
• In correlation analysis the
degree and direction of
relationship between the
variables are studied.
• If value of one variable is
known, the value of other
variable cannot be
estimated.
• Correlation coefficient lies
between -1 to +1.
• Correlation doesnot always
assume cause and effect
relationship.
• In regression analysis, the
nature of relationship is
studied.
• If value of variable is
known, the value of other
variable can be estimated
using the functional
relationships.
• Only one regression
coefficient can be greater
than 1.
• Regression always
expresses the cause and
effect relationship.