Learn about making predictions with regressions.
- [Narrator] Let's talk about a…specific example using regression analysis.…In this case, we're looking at predicting the estimated…home heating oil use by a particular customer…based on three different factors,…a variable that we call the intercept,…the temperature outside, and the level…of insulation in the customer's house.…Let's focus on these bottom three rows in the table…and in particular, focus on…the column labeled, Coefficients.…These coefficients tell us the impact…on home heating oil use in a particular month…given the temperature outside…and the insulation level of the person's house.…
Now, let's see how we would use this in a prediction.…There's three steps to the prediction,…run the regression, which I showed you…the output from the previous slide,…then we're going to save those coefficients.…That was those last three rows of data.…For example, this will help us to measure…the impact for each additional inch…of insulation in a person's house.…And then finally, we're going to use those coefficients…
Professor Michael McDonald demonstrates how to harness the wealth of information available on the Internet to forecast statistics such as industry growth, GDP, and unemployment rates, as well as factors that directly affect your business, like property prices and future interest rate hikes. All you need is Microsoft Excel. Michael uses the built-in formulas, functions, and calculations to perform regression analysis, calculate confidence intervals, and stress test your results. He also covers time series exponential smoothing, fixed effects regression, and difference estimators. You'll walk away from the course able to immediately begin creating forecasts for your own business needs.
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- Identify a good source of free data.
- Name the term for the estimate of the impact of an X variable on a Y variable.
- Tell which statistic offers a bounds on the estimate of the impact of an X variable on a Y variable.
- Assess the type of variable that can be used to capture fixed effects.
- Cite the method by which a forecast can be done with a regression.