Multiple Linear Regression Equation Formula. Y a bx 1 cx 2 dx 3 ϵ. In matrix terms the formula that calculates the vector of coefficients in multiple regression is.
The equation for a simple linear regression is shown below. Y i dependent variable the price of xom x i1 interest rates x i2 oil price x i3 value of s p 500 index x i4 price of oil futures b 0 y intercept at time zero b 1 regression coefficient that measures a unit change in the dependent. ϵ residual error multiple linear regression follows the same conditions as the simple linear model.
Referring to the mlr equation above in our example.
The second equation is an alternative of the first equation it can be written either way and will give the same result. The first equation should look familiar we learned this in algebra. β i x i ε. In fact everything you know about the simple linear regression modeling extends with a slight modification to the multiple linear regression models.
