Regression analysis is a statistical method used to model the relationship between a dependent

variable (outcome) and one or more independent variables (predictors). It helps predict or explain the
impact of changes in predictors on the outcome.

Key Concepts:

1. Regression Line: The best-fit line (e.g., y=mx+b , y=mx+b) that minimizes prediction errors.

2. Slope (mm): Indicates how much the dependent variable changes per unit increase in the
independent variable.

3. Intercept (bb): The value of yy when all predictors are zero.

4. R-squared: Measures how well the model explains the variance in the data (0–100%).

Example (Likely from the Document):

Suppose a dataset links hours studied (independent variable) to exam scores (dependent variable). A
linear regression might yield:

Score=50+5×(Hours Studied)Score=50+5×(Hours Studied)

• Interpretation: For every additional hour studied, the score increases by 5 points.

• R-squared = 0.85: 85% of the score variation is explained by study time.

If the document includes tables or software outputs, they likely show raw data, coefficients, p-values (for
significance), and residuals (differences between predicted and actual values).

For non-linear relationships, the document might also mention multiple regression (multiple predictors)
or logistic regression (for binary outcomes)

simple linear regression using the provided mtcars dataset example:

Problem Statement

Model mpg (miles per gallon) as a linear function of wt (car weight) and qsec (quarter-mile time):

mpg=β0+β1⋅wt+β2⋅qsec+ϵmpg=β0+β1⋅wt+β2⋅qsec+ϵ

• Dependent variable: mpg

• Independent variables: wt, qsec

• Goal: Estimate coefficients β0β0, β1β1, β2β2 to predict mpg.

Key Steps in Regression

o Use the provided dataset (e.g., rows for Mazda RX4, Datsun 710).

o Ensure no missing values in mpg, wt, and qsec (e.g., fix typos
like Hornet+Drive’s hp value).

2. Model Fitting:

o Use the least squares method to minimize prediction errors (ϵϵ).

o Calculate coefficients:

▪ β1β1: Expected change in mpg per unit increase in wt, holding qsec constant.

▪ β2β2: Expected change in mpg per unit increase in qsec, holding wt constant.

3. Example Output (Hypothetical):

mpg=30−3⋅wt+1⋅qsecmpg=30−3⋅wt+1⋅qsec

o Interpretation:

▪ For every 1-unit increase in weight (wt), mpg decreases by 3 units.

▪ For every 1-second increase in quarter-mile time (qsec), mpg increases by 1

4. Prediction:

o For a car with wt=3.0wt=3.0 and qsec=17.0qsec=17.0:

Predicted mpg=30−3(3)+1(17)=30−9+17=38Predicted mpg=30−3(3)+1(17)=30−9+17=38

o Compare with actual data (e.g., "Hornet Sportabout"

Assumptions

1. Linearity: Relationship between mpg and predictors is linear.

2. Independence: Residuals (ϵϵ) are uncorrelated.

3. Homoscedasticity: Residuals have constant variance.

4. Normality: Residuals are roughly normally distributed.

Why This Example?

• Weight (wt): Heavier cars generally consume more fuel (lower mpg), reflected in a negative β1β1
.
• Quarter-mile time (qsec): Slower acceleration (higher qsec) might correlate with better fuel
efficiency (positive β2β2).

Real-World Tools

• Use software like R or Python (with libraries like statsmodels or scikit-learn) to compute
coefficients and validate assumptions.

common types of regression with real-world examples:

1. Linear Regression

• Purpose: Predict a continuous outcome using one independent variable.

• Equation: y=β0+β1x+ϵy=β0+β1x+ϵ

• Example:

o Relationship between advertising spend (independent) and sales revenue (dependent).

o Model: Sales=200+10×(Ad Spend)Sales=200+10×(Ad Spend).

o Interpretation: Every 1increaseinadsboostssalesby1increaseinadsboostssalesby10.

• Purpose: Predict a continuous outcome using multiple independent variables.

• Equation: y=β0+β1x1+β2x2+⋯+βnxn+ϵy=β0+β1x1+β2x2+⋯+βnxn+ϵ

• Example:

o Predicting house prices using predictors like size (sq. ft.), bedrooms, and location.

o Model: Price=50,000+120×(Size)+15,000×(Bedrooms)Price=50,000+120×(Size)+15,000×(
Bedrooms).

3. Logistic Regression

• Purpose: Predict binary outcomes (yes/no, 0/1).

• Equation: P(y=1)=11+e−(β0+β1x)P(y=1)=1+e−(β0+β1x)1

• Example:

o Predicting if a customer will buy a product (1) or not (0) based on age and browsing
time.

o Output: Probability (e.g., 80% chance of purchase).

4. Polynomial Regression

• Purpose: Model non-linear relationships by adding polynomial terms.

• Equation: y=β0+β1x+β2x2+⋯+βnxn+ϵy=β0+β1x+β2x2+⋯+βnxn+ϵ

• Example:

o Relationship between temperature (x) and ice cream sales (y), which peaks at moderate
temperatures (quadratic curve).

5. Ridge Regression

• Purpose: Reduce overfitting in linear models by adding an L2 penalty to shrink coefficients.

• Equation: Minimizes ∑(y−y^)2+λ∑βj2∑(y−y^)2+λ∑βj2.

• Example:

o Predicting stock prices with 100+ correlated economic indicators (avoids overfitting).

6. Lasso Regression
• Purpose: Shrink coefficients and select important predictors using an L1 penalty (can zero out
coefficients).

• Equation: Minimizes ∑(y−y^)2+λ∑∣βj∣∑(y−y^)2+λ∑∣βj∣.

• Example:

o Identifying key factors (e.g., income, education) affecting loan default risk from 50
variables.

7. Poisson Regression

• Purpose: Model count data (non-negative integers).

• Equation: ln⁡(y)=β0+β1xln(y)=β0+β1x.

• Example:

o Predicting number of hospital visits per year based on age and chronic conditions.

8. Cox Proportional Hazards Regression

• Purpose: Analyze time-to-event data (e.g., survival analysis).

• Example:

o Predicting patient survival time based on treatment type and cancer stage.

9. Elastic Net Regression

• Purpose: Combines L1 (Lasso) and L2 (Ridge) penalties for datasets with many correlated
predictors.

• Example:

o Genomic data analysis to identify genes linked to a disease.