What is Regression analysis :
Regression analysis is a statistical technique used to examine the relationship between two or more variables. It is often used to predict the value of one variable (the dependent variable) based on the value of another variable (the independent variable).
For example, consider a company that wants to understand the relationship between the number of hours their employees work and their productivity. The company collects data on the number of hours worked by each employee and their corresponding productivity levels. Using regression analysis, the company can determine the strength and direction of the relationship between hours worked and productivity. If the relationship is positive, this means that as the number of hours worked increases, productivity also increases. On the other hand, if the relationship is negative, this means that as the number of hours worked increases, productivity decreases.
Another example of regression analysis is in the field of economics, where it is often used to predict the relationship between inflation and unemployment. In this case, the independent variable is inflation and the dependent variable is unemployment. If the relationship between these two variables is positive, this means that as inflation increases, unemployment also increases. Conversely, if the relationship is negative, this means that as inflation increases, unemployment decreases.
There are several different types of regression analysis, including simple linear regression, multiple linear regression, and logistic regression. Simple linear regression is used when there is a single independent variable, while multiple linear regression is used when there are multiple independent variables. Logistic regression is used when the dependent variable is binary (i.e., it can only take on two values, such as 0 or 1).
In order to perform regression analysis, a statistical software package (such as SPSS or R) is typically used to fit a regression model to the data. This model is used to predict the value of the dependent variable based on the value of the independent variable(s). The strength of the relationship between the variables is measured using a statistic called the coefficient of determination (R2), which ranges from 0 to 1. A value of 0 indicates that the model does not explain any of the variance in the dependent variable, while a value of 1 indicates that the model explains all of the variance in the dependent variable.
There are several assumptions that must be met in order for regression analysis to be reliable. These include linearity, homoscedasticity, and normality. Linearity refers to the assumption that there is a linear relationship between the dependent and independent variables. Homoscedasticity refers to the assumption that the variance of the residuals (the difference between the predicted values and the observed values) is constant across all values of the independent variable. Normality refers to the assumption that the residuals are normally distributed. If these assumptions are not met, the results of the regression analysis may not be reliable.
Overall, regression analysis is a powerful tool for understanding and predicting the relationship between two or more variables. It is widely used in many different fields, including economics, finance, marketing, and psychology.