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6
Regression
6.1 SIMPLE LINEAR LEAST SQUARES REGRESSION
Let Y be a random variable dened as the “dependent” or “response” variable, and X another ran-
dom variable dened as the “independent” or “factor” variable. Assume we have a joint sample x
i
,
y
i
, i = 1, …, n or a set of n paired values of the two variables. This is a bivariate or two-variable
situation. We already encountered this situation in Chapter 4 when we dened the covariance and
correlation coefcient. Let us start this chapter by considering the scatter plot or diagram, which
shows data pairs from a sample as markers on the x–y plane. As an example, Figure 6.1 shows pairs
of ...