out of 100

PROBLEM

Can people perform better on a crossword when they

have had a good night sleep compared to when they
have been forced to stay awake?
INDEPENDENT VARIABLE

Amount of sleep received

DEPENDENT VARIABLE

Performance on the crossword

WHAT IS A REGRESSION?
 A basic and commonly used type of predictive analysis. The
overall idea of regression is to examine two things: (1) does a set of
predictor variables do a good job in predicting an outcome (dependent)
variable? (2) Which variables in particular are significant predictors of
the outcome variable, and in what way do they–indicated by the
magnitude and sign of the beta estimates–impact the outcome
variable? These regression estimates are used to explain the
relationship between one dependent variable and one or more
independent variables.

Source: https://www.statisticssolutions.com/what-is-linear-regression/
 Regression is a statistical measure used in finance,
investing and other disciplines that attempts to determine the
strength of the relationship between one dependent variable
(usually denoted by Y) and a series of other changing
variables (known as independent variables). Regression helps
investment and financial managers to value assets and
understand the relationships between variables, such as
commodity prices and the stocks of businesses dealing in
those commodities.

- Investopedia
WHAT IS THE DIFFERENCE
BETWEEN CORRELATION
AND REGRESSION?
 Regression is similar to Correlation in that the purpose
is to measure to what extent there is a linear relationship
between two variables. The major difference between the two
is that correlation makes no distinction between independent
and dependent variables while linear regression does. In
particular, the purpose of linear regression is to "predict" the
value of the dependent variable based upon the values of one
or more independent variables.
WHAT IS THE PURPOSE OF
REGRESSION IN
STATISTICS?
 Regression is used to examine the relationship between
one dependent and one independent variable. After
performing an analysis, the regression statistics can be used
to predict the dependent variable when the independent
variable is known. Regression goes beyond correlation by
adding prediction capabilities.
 THREE MAJOR USES FOR
REGRESSION ANALYSIS
(1)determining the strength of predictors,
(2)forecasting an effect, and
(3) rend forecasting.
TWO TYPES OF REGRESSION

Simple Regression
Multiple Regression
 In simple regression a single independent
variable is used to predict the value of a
dependent variable. In multiple
regression two or more independent
variables are used to predict the value of a
dependent variable. The difference between
the two is the number of independent
variables. In both cases there is only a single
dependent variable.
The variable which is used as the predictor is called the
independent variable (X) and the variable whose value is
predicted is the dependent variable (Y). This average
relationship is described by the equation:

Y= a + bX or Y= bX + a
Basilia Ebora Blay
Where:
Y – dependent variable
X – independent variable
a- the Y intercept of the regression line since it is the
point on the Y-axis where the regression line
crosses
b- regression coefficient
- indicates the amount change in Y per unit change
in X.
KEIJO RUOHONEN
Basilia Ebora Blay Keijo Ruohonen

Y= a+ bX
a and b are the estimates of the parameters of regression
which are calculated from the available sample values as
follows:

𝑏 = 𝑁 ∑𝑋𝑌 − ∑𝑋 ∑𝑌 𝑎 = 𝑦 − 𝑏𝑥
N(∑X²) – (∑X)²
or
𝑎 = ∑𝑌 − 𝑏 ∑𝑋
N
Flordeliza C. Reyes Basilion Ebora Blay

𝑎 = 𝑦 − 𝑏𝑥 𝑎 = ∑𝑌 − 𝑏 ∑𝑋
N
Example 1:

X 2 4 6 8 10 12

Y 6 7 8 9 10 11

a.Find the equation of the regression line

b.Find the point estimate of Y when X = 15
X Y X² Y² XY
 X Y X² Y² XY
2 6 4 36 12
4 7 16 49 28
6 8 36 64 48
8 9 64 81 72
10 10 100 100 100
12 11 144 121 132

∑X = 42 ∑Y = 51 ∑X² = 364 ∑Y² = 451 ∑XY = 392

x=7 y= 8.5
𝑏 = 𝑁 ∑𝑋𝑌 − ∑𝑋 ∑𝑌 𝑎 = 𝑦 − 𝑏𝑥
N(∑X²) – (∑X)²
or
𝑎 = ∑𝑌 − 𝑏 ∑𝑋
N

𝑌 = 𝑎 + 𝑏𝑋 b= 0.5
a= 5
Y= 12.5
EXAMPLE 2
A study was made by a businessman to determine the relation
between advertising cost and sales. The following data on 12
commodities were recorded:

A.C 30 15 24 37 42 45 48 40 20 25 20 25
.

Sale 400 320 350 490 500 500 530 385 450 390 365 470
s

Find the estimated regression line and estimate the sales when
X= 43
Advertising Cost Sales (Y) X² Y² XY
(X)

∑X = ∑Y= ∑X² = ∑Y² = ∑XY =

x= y=
Advertising Cost Sales (Y) X² Y² XY
(X)
30 400 900 160,000 12,000
15 320 225 102,400 4,800
24 350 576 122,500 8,400
37 490 1369 240,100 18,130
42 500 1764 250,000 21,000
45 500 2025 250,000 2,2500
48 530 2304 280,900 25,440
40 385 1600 148,225 15,440
20 450 400 202,500 9,000
25 390 625 152,100 9,750
20 365 400 133,225 7,300
35 470 1225 220,900 16,450
∑X = 381 ∑Y= 5,150 ∑X² = 13, 413 ∑Y² = 2,262,850 ∑XY = 170,170
x= 31.75 y= 429.17
𝑏 = 𝑁 ∑𝑋𝑌 − ∑𝑋 ∑𝑌 𝑎 = 𝑦 − 𝑏𝑥
N(∑X²) – (∑X)²
𝑎 = 429.17 − 5.06 31.75
𝑏 = 12 170,170 − 381 5.150 a = 268.52
12( 13,413) – (381)²

b = 5.06

𝑌 = 𝑎 + 𝑏𝑋
𝑌 = 268.52 + 5.06 43
Y = 486.1
 PROBLEM 1

A professor wanted to see if the students’ grades in Mathematics could be predicted

using their average grade in High School. Below are the data that were recorded:

Math 75 75 75 85 76 75 75 79 75 88
Grade

Avr. 82 65 75 65 76 76 65 65 65 75
Grade

a. Calculate the regression equation

b. Estimate the Math grade when the average grade is 80