Is the Regression Line Appropriate (or Good Fit)?

Is the Regression Line Appropriate (or Good Fit)?

From a financial markets perspective, linear regression is described as a way of looking at the relationship between returns on two assets. In this video, Abdulla demonstrates how to calculate the regression line, and evaluates its value as an estimator.
Overview

Beta might not be a reliable measure given the inaccuracy between a regression analysis and the actual data. The following walks us through how to calculate the errors.

Key learning objectives:

  • Identify what determines if beta is a good fit

  • Learn how to calculate errors of a regression

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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