STA 2023 Lecture Notes - Lecture 42: Dependent And Independent Variables, Standard Deviation

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19 Dec 2016
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If the value of the correlation coefficient is significant, the next step is to determine the equation of the regression line which is the data"s line of best fit. Best fit means that the sum of the squares of the vertical distance from each point to the line is at a minimum. Where a= y" intercept b= the slope of the line. The magnitude of the change in one variable when the other variable changes exactly 1 unit is called a marginal change. The value of slope b of the regression line equation represents the marginal change. For valid prediction, the value of the correlation coefficient must be significant. When r is not significantly different from 0, the best predictor of y is the mean of the data values of y. Extrapolation, or making prediction beyond the bounds of the data, must be interpreted cautiously.

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