Which of the following is the equation for the slope of the regression line?
Hint: To calculate the slope and intercept of a regression line, we are going to take the set of data having $x$ and $y$ values. We are taking $x$ and $y$ values because we have to calculate the slope of a straight line and the straight line is of the form $y = mx + c$, where "$m$ and $c$" corresponds to slope and intercept of the straight line. We are taking the set of $x$ and $y$ values $\left( {x,y} \right)$ as: $\left( { - 3,7} \right),\left( {0,4} \right),\left( {3, - 2} \right),\left( {5,2} \right),\left( {3, - 3} \right)$. Then, find the slope of the regression line for the given set of data by putting the values of $x,y,n$ in the formula for slope of the regression line.
Formula used: The formula for slope of the regression line is as follows: $m = \dfrac{{n\sum {xy} - \left( {\sum x } \right)\left( {\sum y } \right)}}{{n\sum {{x^2}} - {{\left( {\sum x } \right)}^2}}}$ Complete step by step answer: Show Note: A regression line indicates a linear relationship between the dependent variables on the y-axis and the independent variables on the x-axis. The correlation is established by analyzing the data pattern formed by the variables. The regression line is plotted closest to the data points in a regression graph. This statistical tool helps analyze the behavior of a dependent variable y when there is a change in the independent variable x—by substituting different values of x in the regression equation. Table of contents
Key Takeaways
Regression Line ExplainedA regression line is a statistical tool that depicts the correlation between two variables. Specifically, it is used when variation in one (dependent variable) depends on the change in the value of the other (independent variable). There can be two cases of simple linear regression:
You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked Regression is extensively applied to various real-world scenarios—business, investment, finance, and marketing. For example, in finance, regression is majorly employed in the BetaBetaBeta is a financial metric that determines how sensitive a stock's price is to changes in the market price (index). It's used to analyze the systematic risks associated with a specific investment. In statistics, beta is the slope of a line that can be calculated by regressing stock returns against market returns.read more and Capital Asset Pricing Model (CAPMCAPMThe Capital Asset Pricing Model (CAPM) defines the expected return from a portfolio of various securities with varying degrees of risk. It also considers the volatility of a particular security in relation to the market.read more)—for estimating returns and budgeting. You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked Using regressionRegressionRegression Analysis is a statistical approach for evaluating the relationship between 1 dependent variable & 1 or more independent variables. It is widely used in investing & financing sectors to improve the products & services further. read more, the company can determine the appropriate asset price with respect to the cost of capital. In the stock market, it is used for determining the impact of stock price changes on the price of underlying commodities. In marketing, regression analysis can be used to determine how price fluctuation results in the increase or decrease in goods sales. It is very effective in creating sales projections for a future period—by correlating market conditions, weather predictions, economic conditions, and past sales. FormulaThe formula to determine the Least Squares Regression Line (LSRL) of Y on X is as follows: Y=a + bX + ɛ Here,
Also, b = (N∑XY-(∑X)(∑Y) / (N∑X2– (∑X)2) ; And, a = (∑Y – b ∑X) / N Where N is the total number of observations. ExampleLet us look at a hypothetical example to understand real-world applications of the theory. The finance manager of ABC Motors wants to correlate variation in sales and variation in the price of electric bikes. For this purpose, he analyzes data pertaining to the last five years. We assume there is no error. The price and sales volume for the previous five years are as follows: YearPrice (in $)Sales Volume20172100150002018205016500201920002100020202200190002021205020000Based on the given data, determine the regression line of Y on X, Solution: Let us determine the regression line of Y on X: Given:
Y = a + bX + ɛ Let us first find out the value of b and a: b = (N∑XY-(∑X)(∑Y) / (N∑X2– (∑X)2)
a = (∑Y – b ∑X) / N
The data is represented as a regression line graph: (Source) Frequently Asked Questions (FAQs)What is a regression line? A regression line depicts the relationship between two variables. It is applied in scenarios where the change in the value of the independent variable causes changes in the value of the dependent variable. How to find a regression line? The formula of the regression line for Y on X is as follows: What is the slope of a regression line? The slope of a regression line is denoted by ‘b,’ which shows the variation in the dependent variable y brought out by changes in the independent variable x. The formula to determine the slope of the regression line for Y on X is as follows: Recommended ArticlesThis has been a guide to what is Regression Line and its definition. We discuss its formula, calculation, equation, slope, examples & least squares regression line. You can learn more about it from the following articles – Which of the following is the equation for the slope of the regression line quizlet?The slope of the regression line is given by b = r(sY/sX).
What is the equation of the regression line quizlet?The general form of the regression line is y=a+bx. y represents the dependent variable which in this scenario is Price. x represents the independent variable which is Size. a represents the y-intercept.
What is the function of the slope in a regression line?The slope indicates the steepness of a line and the intercept indicates the location where it intersects an axis. The slope and the intercept define the linear relationship between two variables, and can be used to estimate an average rate of change.
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