For the Love of Regression: Part III

Analytical Leadership

Today we wrap up the three part series on regression analysis with a discussion of the Coefficient of Determination, otherwise known as . Ranging from 0 to 1 (or 0% to 100%),  is an integral component of regression because it tells us how well our model fits to the actual data. Within the context of analytical leadership, predictive modeling is essential to identifying and capitalizing on emerging trends, and  tells us just how predictive our model is. The goal then is to develop a model that exhibits the highest degree of predictability possible; as we approach 1, we can feel confident in the correlation (not to be confused with causation) between the variables and the ability of the independent variable (x) to predict the dependent variable (y).

In mathematical terms, the formula for  is expressed in the figure below. For our purposes, it isn’t necessary to memorize the formula because we will rely on…

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