Scribd
Upload
13 views3 pages

Regression and Correlation

Uploaded by

Olaniyi Evans
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
13 views3 pages

Regression and Correlation

Uploaded by

Olaniyi Evans
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

28

REGRESSION & CORRELATION

CONTENTS
Regression 262
Simple Regression 262
Coefficient of Determination 264
Correlation Coefficient 265
Multiple Regression 267

REGRESSION
Regression is a statistical method used to model the relationship between a
dependent variable and one or more independent variables. The goal of
regression is to predict the value of the dependent variable based on the values
of the independent variables.
For example, regression could be used to understand whether exam performance
can be predicted based on revision time and lecture attendance. As well,
regression could be used to understand whether obesity can be predicted based
on eating habits and income. The variable being predicted is called the
dependent variable (or sometimes, the outcome, or target). The variable or
variables being used to predict the value of the dependent variable are called the
independent variables (or the explanatory or regressor variables).
There are several types of regression analysis, but the most common are:
Linear regression: Models the linear relationship between the dependent
variable and one or more independent variables. In simple linear regression,
there is one independent variable, while in multiple linear regression, there
are multiple independent variables.
Non-linear regression: Models a non-linear relationship between the dependent
variable and the independent variables.

SIMPLE REGRESSION
Simple regression is a linear approach to modelling the relationship between
two variables. It involves one independent variable and one dependent variable.
In statistical notation, y denotes the dependent variable and x denotes the
independent variable. A regression model is an equation which describes how
y is related to x and an error term.
The simple regression model is as follows:
𝒚 = 𝜷𝟎 + 𝜷𝟏 𝒙 + 𝝐

β0 and β1 are the parameters of the model, and ε is the error term. The error term
accounts for the variations in y that cannot be explained by the linear
relationship between x and y.
The regression equation is an equation that describes how the expected value
of y, denoted E(y), is related to x.
The simple regression equation is as follows.
𝑬(𝒚) = 𝜷𝟎 + 𝜷𝟏 𝒙

The graph of the simple regression equation is a straight line. β0 is the y-intercept
of the line. β1 is the slope. E(y) is the expected value (the mean) of y for any given
value of x.
Chapter 28| Regression & Correlation 263

Figure 28.1 Possible Regression Lines in Simple Regression


a. Positive linear relationship b. Negative linear relationship

β0 and β1 are population parameters which are unknown. In practice, sample


statistics, b0 and b1, are computed as estimates. b0 and b1 are substituted for β0
and β1 in the regression equation to obtain the estimated regression
equation.
The estimated regression equation is as follows.
̂ = 𝒃𝟎 + 𝒃𝟏 𝒙
𝒚
The least squares method is a process for using sample data to find the
estimated regression equation; the proof uses simple calculus and linear algebra.
Using the least squares method, the values of b0 and b1 can be found using:
̅ − 𝒃𝟏 𝒙
𝒃𝟎 = 𝒚 ̅
∑(𝒙𝒊 − 𝒙
̅) (𝒚𝒊 − 𝒚
̅)
𝒃𝟏 =
∑(𝒙𝒊 − 𝒙̅)𝟐

Where 𝑦𝑖 = the value of the ith observation of the dependent variable; 𝑥𝑖 = the
value of the ith observation of the independent variable; 𝑦̅ = mean of the
dependent variable; and 𝑥̅ = mean of the independent variable.

 EXAMPLE 28.1
Pizza Robots is a company using robots to deliver pizza. The following data were
collected from a sample of 10 Pizza Robots outlets located near university
campuses.
Student population
9 11 14 14 23 26 27 32 34 40
(in thousands)
Monthly sales
54 165 163 195 169 316 219 329 324 416
($’000)
a) Taking monthly sales as the dependent variable, develop the estimated
regression equation by computing the values of b0 and b1
b) What is the level of monthly sales for an outlet to be located near a campus
with 20,000 students?
S O L U T I O N tips
Let x be the size of the student population (in thousands) and y the monthly sales
(in thousands of dollars).
a) There are 10 outlets, we have n = 10 observations.
Begin the calculations by computing 𝑥̅ and 𝑦. ̅
∑ 𝑥𝑖 230 ∑ 𝑦𝑖 2350
𝑥̅ = = = 23 𝑦̅ = = = 235
𝑛 10 𝑛 10
Calculate the slope (b1) as follows.
∑(𝑥𝑖 − 𝑥̅ ) (𝑦𝑖 − 𝑦̅) 9463
𝑏1 = = = 9.3
∑(𝑥𝑖 − 𝑥̅ )2 1018
264 Olaniyi Evans | University Mathematics

Purchase the full book at:


https://unimath.5profz.com/

We donate 0.5% of the book sales


every year to charity, forever. When
you buy University Mathematics (I &
II) you are helping orphans and the
less privileged.

You might also like