Overview Linear regression is a statistical tool used to predict future values from past values. In the case of security prices, it is commonly used to determine when prices are overextended. A Linear Regression trendline uses the least squares method to plot a straight line through prices so as to […]
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This tutorial written and reproduced with permission from Peter Ponzo We assume that some set of variables, y1, y2, … yK, is dependent upon variables xk1, xk2, … xkn (for k = 1 to K). We assume the relationship betwen the ys and xs is “almost” linear, like so: [1] y1 = ß0 + ß1×11 + ß2×12 + … +ßnx1n + e1 y2 = ß0 + ß1×21 + ß2×22 + … +ßnx2n + e2 …….. yK = ß0 + ß1xK1 + ß2xK2 + … […]
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