• Regression is a statistical technique that relates a dependent variable to one or more independent (explanatory) variables.
  • The regression model is able to show whether the changes observed in the dependent variable are due to changes in one or more independent variables.
  • It does this by essentially choosing the most suitable line and seeing how the data is distributed around that line.
  • Regression helps economists and financial analysts with everything from asset valuation to forecasting.
  • In order for the regression results to be correctly interpreted, several assumptions must be made about the data and the model itself.