Multivariate Estimation and Model Fit
MULTIVARIATE ESTIMATION AND MODEL FIT Assume once again that you are a consultant who works for the Diligent Consulting Group. You are continuing to work on the analysis of the customer database from Modules 1 through 3. SLP Assignment Expectations Complete the following tasks in the Module 4 SLP assignment template: Compare the coefficients of determination (r-squared values) from the two linear regressions: simple linear regression from Module 3 Case and the multivariate regression from Module 4 Case. Which model had the best fit? Calculate the residual for the first observation from the simple linear regression model. Recall, the Residual = Observed value – Predicted value or e = y ?. What happens to the overall distance between the best fit line and the coordinates in the scatterplot when the residuals shrink? What happens to the coefficient of determination when the residuals shrink? Consider the r-squared from the linear regression model and the r-squared from the multivariate regression model. Why did the coefficient of determination change when more variables were added to the model?
