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Derivation of Linear Regression Model

The simple linear regression equation is derived by finding the best-fitting line that relates an independent variable (x) to a dependent variable (y) using the least squares method to minimize the sum of squared residuals. The equation is represented as ŷ = a + bx, where a is the slope and b is the y-intercept. In regression analysis, y refers to the actual observed value of the dependent variable, while ŷ (y-hat) is the predicted value from the model, with the difference between them known as the error or residual.

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Celine Erica Babasoro DeLeon
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66 views1 page

Derivation of Linear Regression Model

The simple linear regression equation is derived by finding the best-fitting line that relates an independent variable (x) to a dependent variable (y) using the least squares method to minimize the sum of squared residuals. The equation is represented as ŷ = a + bx, where a is the slope and b is the y-intercept. In regression analysis, y refers to the actual observed value of the dependent variable, while ŷ (y-hat) is the predicted value from the model, with the difference between them known as the error or residual.

Uploaded by

Celine Erica Babasoro DeLeon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1.​ Briefly describe the derivation of the simple linear regression equation.

-​ The derivation of the simple linear regression equation involves finding the
best-fitting line that describes the relationship between an independent
variable (x) and a dependent variable (y). The process starts with the
assumption that this relationship can be represented by a straight line, ŷ =
a+bx, where a is the slope and b is the y-intercept.

To determine a and b, we use the least squares method, which minimizes


the sum of the squared differences between the actual values of y and the
predicted values ŷ. These squared differences are known as residuals. By
taking the partial derivatives of the sum of squared residuals with respect
to a and b, and setting them equal to zero, we solve for the slope and
intercept. The resulting values give us the equation for the best-fitting line,
which can then be used to predict future values of y based on x.
-​
2.​ Differentiate y caret from y.
-​ In regression analysis, y and represent ŷ two distinct concepts. The value
y refers to the actual or observed value of the dependent variable, which
comes directly from the data. It’s what we measure or record in real-world
scenarios. On the other hand, ŷ or "y-hat," represents the predicted value
generated by the regression model. This is the value the model estimates
based on the relationship it identifies between the independent and
dependent variables. The difference between y (the actual value) and ŷ
(the predicted value) is known as the error or residual. The goal of the
regression model is to minimize these errors, ensuring that the predicted
values (ŷ) are as close as possible to the actual values (y).

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