Multiple Linear Regression Analysis

USMAN GHANI
Multiple Regression Analysis:

 When the dependence of a variable on two or more than two independent variable is
studied, its called multiple regression.

 Multiple regression is the extension of simple regression, to take account of more than
one independent variable.

 Describe the relationship between several independent variables and a dependent

variable using multiple regression analysis.

 Example: The yield of a crop depends upon the fertility of land, fertilizer applied,
rainfall, quality of seeds and so on.
Multiple regression model:

 The model is represented by the following equation:

 Where y is dependent variable,

 X1, X2,…..Xk are the independent variable.
 α is the intercept.
 Β1, β2,…..βk are the regression co-efficient.
 Ε error term has a normal distribution with mean zero and constant standard deviation.
Coefficient of Multiple Determination:

 The percent of variation in the dependent variable, explained by the set of independent
variables, X1,X2,. . .. Xk.

 Co-efficient of multiple determination is the most commonly used measure of the

goodness of a fit of regression line.

 The co-efficient of determination which measure the proportion of variability in the

values of depend variable explained by its linear relation with the independent variables
is defined by the ratio of the explained variation to the total variation.
 R² = explained variation/ total variation
characteristics of the coefficient of multiple
determination:
1. It is symbolized by a capital R squared. In other words, it is written as because it
behaves like the square of a correlation coefficient.
2. It can range form 0 to 1. A value near 0 indicates little association between the set of
independent variables and the dependent variable. A value near 1 means a strong
association.
3. It cannot assume negative values. Any number that is squared or raised to the second
power cannot be negative.
4. It is easy to interpret. Because is a value between 0 and 1, it is easy to interpret,
compare, and understand.
Standard deviation of multiple regression or
multiple standard error of estimate:
 It measure the variation of y values about the multiple regression. For a multiple
regression with a two independent variable X1 and X2 it is denoted by Sy.12.