Regression

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Regression Analysis
Regression analysis is an important tool to understand possible relationships on one variable
to another. It is also valuable in coming up with prediction statements to see possible values of a
certain variable given another variable. However, part of using regression analysis is the
examination of linearity through the use of a scatter plot since the examination of the linearity of the
data will help improve the accuracy of the resulting regression. A scatter plot is a chart that shows
the relationship between the variables to be examined in the regression analysis.
In the conduct of regression analysis, the dependent variable or the response variable is the
variable to be predicted while the independent variable is called the predictor or explanatory
variable. The dependent variable is tried to be explained by the explanatory variable (Gallo, 2015).
The most simple way of analysis is through the use of a simple linear regression model
where the model requires the use of one (1) independent variable. The general format of the model
is =β0 + β1X1 + €. Multiple regression model, on the other hand, is used when there are several
possible predictors of the dependent variable. The general format of the model is Y=β0 + β1X1 +
β2X2+……+ βkXk+ €. In both situations, € stands for the possible random error. The evaluation of
the multiple regression model is just like the simple linear regression model. Sometimes the
relationship between the variables is nonlinear, thus there is a need to conduct simple variable
transformation to make it linear. This is available in most of the software used to do regression
analysis like Excel.

In using regression analysis, there are some cautions and possible pitfalls. One of the most
common errors in the conduct of regression analysis is when the assumptions are not met. This can
either be that the resulting statistical test is found to be invalid resulting from interval estimates. The
variables may be highly correlated with each other but there is a possibility of another factor that
affects both such as inflation rate. This often results when the value of x is below the minimum or
above the maximum value.
There are three categories of forecasting models. These are causal models, time series
models, and qualitative models. Causal models are used when the factors impact the quantity of the
forecast. This type of model is often used when the factors to be measured are humidity, weekday,
temperature, weekends, or season. Regression analysis is considered a causal model.
Time series models use the collection of past data to predict what happens in the future. It
assumes that the past will repeat itself and the way it will happen is based on the historical data
presented. Problems involving the use of moving averages, trend projection, exponential smoothing,
and decomposition are the common uses of time series models (Render et.al, 2018).
Qualitative models are a forecasting technique that is subjective because experts' judgments
and opinions are the one’s analyzed usually due to the absence of historical data. This type of
forecasting is usually done when conducting market research, the Delphi method, or the historical
life-cycle analogy.
There are several real-world applications of linear regression. It can be used in the prediction
of sales of products where the different factors may be inputted as the possible predictors of the
sales. In sports, for example, a linear regression can be used to predict the scores to be produced
by a specific athlete (Nguyen, 2020).

Works Cited
Gallo, Amy (2015). “A Refresher on Regression Analysis.” Retrieved from https://hbr.org/2015/11/a-
refresher-on-regression-analysis
Nguyen, Joseph (2020). “Regression Baiscs for Business Analysis.” Retrieved from
https://www.investopedia.com/articles/financial-theory/09/regression-analysis-basics-
business.asp
Render, Barry et. al. (2018). “Quantitative Analysis for Management, 13 th Edition.” Retrieved from
https://www.pearson.com/us/higher-education/program/Render-Quantitative-Analysis-for-
Management-RENTAL-EDITION-13th-Edition/PGM335022.html

Regression

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Regression

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Name

Regression analysis is an important tool to understand possible relationships on one variable

the relationship between the variables to be examined in the regression analysis.

analysis like Excel.

above the maximum value.

temperature, weekends, or season. Regression analysis is considered a causal model.

by a specific athlete (Nguyen, 2020).

Gallo, Amy (2015). “A Refresher on Regression Analysis.” Retrieved from https://hbr.org/2015/11/a-

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