Chapter 15
Simple Regression Analysis
IN THIS CHAPTER
Understanding the assumptions underlying regression analysis
Implementing the simple regression model
Interpreting the regression results
Regression analysis is a statistical methodology that helps you develop a model of the response of a dependent variable (Y) to a change in an independent variable (X). The two types of regression analysis are simple regression analysis (which I discuss in this chapter) and multiple regression. Simple regression analysis is used for cases where there is only one independent variable while multiple regression is used for cases with two or more independent variables.
For example, suppose that a researcher is interested in analyzing the relationship between the annual returns to the Standard & Poor’s 500 (S&P 500) and the annual returns to Apple stock.
The Standard and Poor’s 500 (S&P 500) is a broad-based stock market index; it contains the 500 largest U.S. stocks, based on market capitalization. (The market capitalization of a stock equals the market price of the stock times the number of outstanding ...
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