10/4/23, 10:50 AM Regression Analysis in Excel (In Easy Steps)
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R Square | Significance F and P-Values | Coefficients |
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This example teaches you how to run a linear regression
analysis in Excel and how to interpret the Summary Output.
Learn more,
Below you can find our data. The big question is: is there a
relation between Quantity Sold (Output) and Price and
it's easy
Histogram
Advertising (Input). In other words: can we predict Quantity Descriptive Statistics
Sold if we know Price and Advertising?
Anova
F-Test
t-Test
Moving Average
Exponential
Smoothing
Correlation
1. On the Data tab, in the Analysis group, click Data Analysis. Regression
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Excel File
regression.xlsx
Note: can't find the Data Analysis button? Click here to load the
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Analysis ToolPak add-in. Create a Macro
2. Select Regression and click OK.
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10/4/23, 10:50 AM Regression Analysis in Excel (In Easy Steps)
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3. Select the Y Range (A1:A8). This is the predictor variable (also
called dependent variable).
4. Select the X Range(B1:C8). These are the explanatory
variables (also called independent variables). These columns
must be adjacent to each other.
5. Check Labels.
6. Click in the Output Range box and select cell A11.
7. Check Residuals.
8. Click OK.
Excel produces the following Summary Output (rounded to 3
decimal places).
R Square
R Square equals 0.962, which is a very good fit. 96% of the
variation in Quantity Sold is explained by the independent
variables Price and Advertising. The closer to 1, the better the
regression line (read on) fits the data.
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10/4/23, 10:50 AM Regression Analysis in Excel (In Easy Steps)
regression line (read on) fits the data.
Significance F and P-values
To check if your results are reliable (statistically significant), look
at Significance F (0.001). If this value is less than 0.05, you're
OK. If Significance F is greater than 0.05, it's probably better to
stop using this set of independent variables. Delete a variable
with a high P-value (greater than 0.05) and rerun the regression
until Significance F drops below 0.05.
Most or all P-values should be below below 0.05. In our
example this is the case. (0.000, 0.001 and 0.005).
Coefficients
The regression line is: y = Quantity Sold = 8536.214 -835.722 *
Price + 0.592 * Advertising. In other words, for each unit
increase in price, Quantity Sold decreases with 835.722 units.
For each unit increase in Advertising, Quantity Sold increases
with 0.592 units. This is valuable information.
You can also use these coefficients to do a forecast. For
example, if price equals $4 and Advertising equals $3000, you
might be able to achieve a Quantity Sold of 8536.214 -835.722
* 4 + 0.592 * 3000 = 6970.
Residuals
The residuals show you how far away the actual data points are
fom the predicted data points (using the equation). For
example, the first data point equals 8500. Using the equation,
the predicted data point equals 8536.214 -835.722 * 2 + 0.592 *
2800 = 8523.009, giving a residual of 8500 - 8523.009 =
-23.009.
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10/4/23, 10:50 AM Regression Analysis in Excel (In Easy Steps)
example, the first data point equals 8500. Using the equation,
the predicted data point equals 8536.214 -835.722 * 2 + 0.592 *
2800 = 8523.009, giving a residual of 8500 - 8523.009 =
-23.009.
You can also create a scatter plot of these residuals.
10/10 Completed! Learn more about the analysis toolpak >
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