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Simple Linear Regression (Excel)

Simple linear regression is a statistical way to model the relationship between dependent variable (usually denoted as y) and explanatory variable. We are actually trying to find a linear equation that best describes the given x and y. This in some cases can be also be used to predict future values e.g. in trendline.

In excel there are several ways to do this. First we will use the LINEST funtion just to find the correct equation.

linest

Select a range of two cells parallel to each other (e.g. C10:D10). Create a following formula by typing =LINEST(D4:D7,C4:C7) but instead finishing the formula with ENTER use CTRL+SHIFT+ENTER. If you finished the formula correctly in both cells should now be a following formula =LINEST(D4:D7,C4:C7)

As a result you now have the parameters k and b for the linear equation: y=kx+b. So in our case the lines equation is y=0.58x+3.06.

Next create a formula =$C$10*C4+$D$10 to calculate the lines values for each x and create the graph using Excel 2010 Layout3 that shows us the trendline automatically:

linest

Last modified on August 19 2015

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