preview

Ols Work Case Study

Good Essays

How does OLS Work
The ordinary least squares (OLS) works in regression by computing the values of intercept and slope that represents the best fit for the observation. The regression line in Minitab is based on residuals and or errors by calculating our parameter by minimizing the sum of squares for all the observation errors. In addition, OLS works by finding the best fitting line relationship between variables. By deriving residuals, we minimize the sum of square from the regression line. After that, we will interpret the data of the coefficient, T-Value, and P-Value. After determining the regression equation, the highest coefficient must be thrown out. We must do one at a time to have a good statically significant model. Next, …show more content…

Meaning is there some degree of significant when I visually analyze the regression correlation. This allows me to establish a quantitative relationship between two or more variables. The independent variables (LHS) are used to predict, while the dependent variable (RHS) is used to response to the independent variable. To get the best fitted line of regression the best method of least squares. This is done by minimizing the sum of squares of vertical deviation, because since the deviation is squared followed by summed there is no indication of positive and negative values. Once I fitted my regression model, then I will analyze my residuals. The residuals are my deviations from the observation values. This will determine if my assumption on the linear relationship is feasible.
When applying regression there is a relation among variables in question such as can, we establish a pattern (homoscedasticity). In the condition homoscedasticity, regardless of the x value you must have the same variance (math form: s^2). In addition to homoscedasticity, you can come across models that are heteroscedasticity. This model can be corrected by robust consistent errors. This will transform the data by using the math form of log on the dependent variables. It turns out that if I use dummy variables, in my regression analysis that I can potentially better my model and predict my outcome (only the dependent variable). However, if there is only one

Get Access