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What is Multiple Regression?

Definition: Multiple regression is a statistical analysis that is used to compare the relationship of two factors or trends to determine the correlation, if any, between the two.

What Does Multiple Regressions Mean?

What is the definition of multiple regression analysis? Regression formulas are typically used when trying to determine the impact of one variable on another. Typically the regression formula is ran by entering data from the factors in question over a period of time or occurrences. For example, if one had a hypothesis that rain had a direct impact on the amount of ice cream sold on a given day, they would use values for the amount of rainfall (inches) over, letís say, a week. They would also plug in the values for how much ice cream was sold (scoops) each day during that period. Using this data to run a regression would help provide conclusively prove or disprove the hypothesis that the amount of rain has an impact on how much ice cream is sold. It will also tell whether the correlation is positive or negative.

Businesses typically use statistical regressions in order to determine which factors may have an effect on their individual assets. For instance, a business may run a multiple regression analysis to determine the impact that a market has on the companyís assets. Regression analysis can also be used with more than one factor to see if there is a cumulative impact. Businesses often will use this analysis at one point or another because it is important to ascertain what factors are influencing the market price of their assets or stock price.

Example

Jimmy owns a sandwich company Jimmy Johnís. Jimmy notices that his sales appear to increase when the local baseball team finishes up their games. Jimmy theorizes that there is a correlation between the conclusion of these baseball games and his increased sales, but he is not entirely sure. He decides to confirm his hypothesis and run a statistical regression analysis. Upon completion, he looks at the resulting values and is able to see that there is a strong positive correlation between the conclusion of these baseball games and the increase of sales.

Summary Definition

Define Multiple Regression Analysis: Multiple regression means a statistical method for analyzing the relationship between two variables.

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