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How to Analyze the Regression Analysis Output from Excel

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How to Analyze the Regression Analysis Output from Excel In a simple regression model, we are trying to determine if a variable Y is linearly dependent on variable X. That is, whenever X changes, Y also changes linearly. A linear relationship is a straight line relationship. In the form of an equation, this relationship can be expressed as Y = α + βX + e In this equation, Y is the dependent variable, and X is the independent variable. α is the intercept of the regression line, and β is the slope of the regression line. e is the random disturbance term. The way to interpret the above equation is as follows: Y = α + βX (ignoring the disturbance term “e”) gives the average relationship between the values of Y and X. …show more content…

The stronger the relationship between the two variables, the closer is the value of R2 to 1. t-value: A rough rule of thumb to determine the significance of X in explaining Y is that the t-value of the slope coefficient, β, should be at least 2. The greater the t-value, the more is the evidence that X is significant in explaining Y. Significance F: The lower this value, the stronger is the evidence that there is indeed a relationship between X and Y. If this value is less than 0.05, we would be safe in accepting that there is a relationship between X and Y. P-value: Look at the p-value of the independent variable (and not the intercept). If this p-value is less than 0.05, we would be safe in accepting that there is a relationship between X and Y. 95% Confidence Interval: Look at the 95% confidence interval of the independent variable (not the intercept). If this confidence interval does not contain zero, we would be safe in accepting that there is a relationship between X and Y. However, if the 95% confidence interval contains zero, there is a big chance that we would making a mistake by assuming that there is a relationship between X and

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