What is Linear Regression?
Abdulla Javeri
30 years: Financial markets trader
This video is a continuation in the series where Abdulla examines whether movements in one asset are somehow related to movements in another asset. The subject of this video is linear regression, otherwise known as simple linear regression or least squares regression.
This video is a continuation in the series where Abdulla examines whether movements in one asset are somehow related to movements in another asset. The subject of this video is linear regression, otherwise known as simple linear regression or least squares regression.
What is Linear Regression?
4 mins 55 secs
Linear regression, also known as simple linear regression or least squares regression, attempts to quantify the expected return for one asset given the return for another asset. The regression line defines the relationship between the expected return for a particular asset (defined as the dependent variable) and another asset (defined as the independent variable). The line passes through the average of both, with a slope that minimises residual errors.
Key learning objectives:
What is linear regression?
How do you construct a regression line?
How do you define the slope of the line?
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