Lesson 19.

The Line of Best Fit

 Learning Competency

At the end of the lesson, you should be able to draw

the best-fit line on a scatter plot.
 Objectives

At the end of this lesson, the learners should be able to

do the following:

● Correctly test the significance of a correlation

coefficient.

● Accurately find the regression line of two variables.

● Correctly perform regression analysis.

Statistics is useful in business because it allows people to make
decisions based on the given data. It can also help you predict a
possible outcome, given previous data.
For instance, you want to know how much sales you can make
given a certain price of a commodity. You can gather
information on different stores on the different prices of the
stores and how many people bought that item in a specific
period. From there, you can use statistical analysis to determine
how many people will buy that product if it is set at a specific
price. In this case, the line of best fit will be useful to predict the
outcome.
In this lesson, you will learn about the line of best fit.
 Essential Questions

● How does the coefficient of determination help us in using

the regression line?

● How can you make use of the regression line of two

variables if the correlation coefficient is not significant?
 Learn about It!

Scatter Plot
This is a diagram that uses coordinates to show values for two
variables.
 Learn about It!

Scatter Plot
Example:
The diagram below is an example of a scatter plot.
 Learn about It!

Testing the Significance of the Correlation

Coefficient
To test whether a correlation coefficient is significant, we solve
the test statistic given by

where is the correlation coefficient and is the sample size.

 Learn about It!

Testing the Significance of the Correlation

Coefficient
Then, we compare 𝑡 to the critical values obtained from the 𝑡-
table using the significance level 𝛼 and the degrees of freedom
.
 Learn about It!

Line of Best Fit or the Regression Line

This is a straight line that best represents the data on a scatter
plot.

This is used to make predictions on the basis of the data. In a

regression analysis, the correlation coefficient should first be
tested for significance.
 Learn about It!

Line of Best Fit or the Regression Line

The regression line follows the form , where and are
computed as follows:
 Learn about It!

Line of Best Fit or the Regression Line

Example:
The line of best fit of the scatter plot above is shown below.
 Learn about It!

Coefficient of Determination
This is used to measure how well a regression line represents a
given data. This is the square of the correlation coefficient,
which is . This coefficient is used to explain the extent to which
the variability of one variable can be explained by the other
variable.
 Learn about It!

Coefficient of Determination
Example:
If the value of the correlation coefficient is , we can solve the
coefficient of determination by taking its square.
 Try
Let’sit!Practice

Example 1: The correlation coefficient between an

independent variable and a dependent variable is .
Determine how a value of can be predicted from the value of
in the regression line.
 Solution to Let’s Practice

Example 1: The correlation coefficient between an independent variable and a dependent

variable is . Determine how a value of can be predicted from the value of in the regression
line.

Solution:
To determine how certain we can predict the dependent
variable from the independent variable, we obtain the
coefficient of determination.
 Solution to Let’s Practice

Example 1: The correlation coefficient between an independent variable and a dependent

variable is . Determine how a value of can be predicted from the value of in the regression
line.

Solution:
Since the value of the correlation coefficient is , we can solve
the coefficient of determination by taking its square.
 Solution to Let’s Practice

Example 1: The correlation coefficient between an independent variable and a dependent

variable is . Determine how a value of can be predicted from the value of in the regression
line.

Solution:
Therefore, there is a 42.25% certainty that we can predict the
correct value of from a given value of using the regression line.
 Try
Let’sit!Practice

Example 2: Test the significance of the correlation coefficient

of an independent variable and a dependent variable at . The
sample size is .
 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
1. State the null and the alternative hypotheses.

There is no significant relationship between the

independent variable and the dependent variable .

There is a significant relationship between the independent

variable and the dependent variable .
 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
2. State the decision rule.

The test is two-tailed. Since , we have

 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
2. State the decision rule.

Using , we obtain the critical values using the -table. At , the

critical values are . Thus, the rejection region lies at or .
 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
3. Solve for the test statistic value.
 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
3. Solve for the test statistic value.
 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
4. Make the decision.

Since , it does not lie in the rejection region. Thus, we failed to

reject .
 Solution to Let’s Practice

Example 2: Test the significance of the correlation coefficient of an independent variable and
a dependent variable at . The sample size is .

Solution:
5. State the conclusion.

There is no significant relationship between the independent

variable and the dependent variable .
 Try It!

Individual Practice:
1. The correlation coefficient between an independent
variable and a dependent variable is . Determine how
certain can be predicted from in the regression line.

2. Test the significance of the correlation coefficient of an

independent variable and a dependent variable at . The
sample size is .
 Try It!

Group Practice: This should be done in pairs.

Perform a regression analysis on 14 9

the following data at . Assume 15 10
that is the independent variable 19 7
and is the dependent variable. 23 9
20 8
21 9
17 8
24 11
 Key Points

● The scatter plot is a diagram that uses coordinates to

show values for two variables

● In testing the significance of the correlation

coefficient, we can use the test statistic .
 Key Points

● The line of best fit or the regression line is a straight line

that best represents the data on a scatter plot. It is used to
make predictions on the basis of the data. In a regression
analysis, the correlation coefficient should first be tested
for significance.
 Key Points

● The coefficient of determination is used to measure how

well a regression line represents a given data. It is the
square of the correlation coefficient, which is . This
coefficient is used to explain the extent to which the
variability of one variable can be explained by the other
variable.
 Bibliography

Foley, Ben. “What is Regression Analysis and Why Should I Use It?” Surveygizmo. Retrieved 17 September
2019 from https://bit.ly/2XAyMC4.

Glen, Stephanie. “Regression Analysis: Step by Step Articles, Videos, Simple Definitions.” Statistics How
To. Retrieved 17 September 2019 from https://www.statisticshowto.com
/probability-and-statistics/regression-analysis/

Lumen Learning. “The Regression Line.” Retrieved 17 September 2019 from https://bit.ly/2lTSEmk.