What is Regression Analysis?

Regression analysis is a way of looking at data to figure out how a change in one thing (called the independent variable) affects something else (called the dependent variable). It’s like a detective trying to solve a mystery by looking at all the data and evidence. The detective (the regression analysis) looks at how the independent variable affects the dependent variable.

An example in business

Let’s say a business wants to know how the amount of money they spend on advertising affects the number of customers they get. They can use regression analysis to help them figure this out. The amount of money spent on advertising would be the independent variable, and the number of customers would be the dependent variable. The regression analysis would look at the data to see how the two variables are connected.

How does regression analysis work?

Regression analysis is done by looking at a chart that has the independent variable on the x-axis (the horizontal line) and the dependent variable on the y-axis (the vertical line). You can use this chart to see how the two variables are related. If the independent variable goes up, does the dependent variable also go up? Or does it go down? The chart will show you this.

Why use regression analysis?

Regression analysis is a useful tool for businesses because it can help them make decisions about how to spend their money. For example, if the regression analysis shows that the more money a business spends on advertising, the more customers they get, then the business can decide to invest more money in advertising to get more customers.

How accurate is regression analysis?

Regression analysis is not perfect, but it does give useful insight into how two variables are related. However, it’s important to remember that it’s not a guarantee. The results of the analysis can only be as accurate as the data used to make them.

Consider this in your business

As you consider how to best use data science, machine learning, and artificial intelligence in your business, consider how regression analysis can help you make decisions. How could you use regression analysis to understand how a change in one thing affects something else?

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