The Cove Business Standards Discussion Forums More Free Files Forum Discussion Thread Post Attachments Listing Cove Discussion Forums Main Page
Miner's MSA (Measurement Systems Analysis) Blog
Go Back   The Elsmar Cove Business Systems and Standards Discussion Forums > Common Quality Assurance Processes and Tools > Quality Tools, Improvement and Analysis > Quality Assurance and Compliance Software Tools / Solutions > Using Minitab Software
Forum Username

Elsmar Cove Forum Visitor Notice(s)

Wooden Line

How to interpret a Linear Regression in Minitab?

Elsmar XML RSS Feed
Elsmar Cove Forum RSS Feed

Monitor the Elsmar Forum
Courtesy Quick Links

Links that Cove visitors will find useful in your quest for knowledge:


ASQ - American Society for Quality

International Standards Organization - ISO Standards and Information

Atul's
Quality Forum Online

Howard's
International Quality Services

Marcelo Antunes'
SQR Consulting, and
Medical Devices Expert Forum

Bob Doering
Bob Doering's Blogs and,
Correct SPC - Precision Machining

NIST's Engineering Statistics Handbook

IRCA - International Register of Certified Auditors

SAE - Society of Automotive Engineers

Quality Digest

IEST - Institute of Environmental Sciences and Technology


Related LinkedIn Groups

ISO 9001 for Small Businesses

ISO 9001:2015 Revision Discussions

Information Security Community

Medical Devices Group

Quality and Regulatory Network

FDA (Food and Drugs)

AS91XX Series - Tips and Advice


Related Topic Tags
linear regression analysis, minitab (statistical analysis software), statistical analysis and studies
Reply
 
Thread Tools Search this Thread Rate Thread Content Display Modes
  Post Number #1  
Old 6th April 2012, 09:11 PM
staykov

 
 
Total Posts: 2
Question How to interpret a Linear Regression in Minitab?

Hello, I have to do a finance project and am really struggling here. I already passed the deadline and have 1 more week to do it, or I'll get 0 marks

I am doing Purchasing power parity and have to make a regression analysis, using minitab. One of the tests that I am doing is to investigate the relationship between 'The change in exchange rates' versus 'The difference in inflation rates' of two countries. I've done the regression, but now I have to say whether the numbers are good or bad and to draw implications from it. I've searched the web, but everything is very incomprehensible... Here is the regression that I've made and I believe that it is correctly done. Can someone explain what the results of the test mean?
Quote:
The regression equation is
Change in exchange rates = - 0,0131 + 0,00357 Inflation difference


Predictor Coef SE Coef T P
Constant -0,013144 0,002931 -4,48 0,000
Inflation difference 0,003570 0,001845 1,94 0,055


S = 0,0302862 R-Sq = 3,1% R-Sq(adj) = 2,2%


Analysis of Variance

Source DF SS MS F P
Regression 1 0,0034353 0,0034353 3,75 0,055
Residual Error 119 0,1091531 0,0009173
Total 120 0,1125885


Unusual Observations

Change in
Inflation exchange
Obs difference rates Fit SE Fit Residual St Resid
8 1,13 -0,08764 -0,00910 0,00296 -0,07854 -2,61R
12 1,57 -0,07456 -0,00753 0,00334 -0,06703 -2,23R
14 -4,38 -0,15538 -0,02877 0,00949 -0,12661 -4,40RX
18 6,62 -0,03359 0,01048 0,01154 -0,04407 -1,57 X
27 -3,98 0,00050 -0,02736 0,00879 0,02785 0,96 X
31 5,37 0,00034 0,00604 0,00932 -0,00569 -0,20 X
35 0,72 -0,10906 -0,01056 0,00277 -0,09850 -3,27R
85 1,07 0,06067 -0,00934 0,00292 0,07001 2,32R
120 1,18 -0,06993 -0,00892 0,00299 -0,06101 -2,02R

R denotes an observation with a large standardized residual.
X denotes an observation whose X value gives it large leverage.
Thank you in advance, I would really appreciate your help

Sponsored Links
  Post Number #2  
Old 7th April 2012, 10:09 AM
Miner's Avatar
Miner

 
 
Total Posts: 3,772
Look! Re: How to interpret a Linear Regression in Minitab?

You should always begin a regression analysis by graphing the two variables. There could be a curve relationship that will not show up in linear regression.

There are several thing to review on the Session window output.
  • Look at the p-values for each variable. Your p-value is 0.055. This is worth investigating. Most people use 0.05 or 0.10 as the threshold for significance.
  • Look at the R^2 values. Yours are extremely low. This means that the model is a very poor fit and is not useful for prediction. This can be caused by missing variables, and/or overlooking a curvilinear relationship.
  • Look at the list of unusual observations. You have a lot of influential (high leverage) data points (potential outliers) and points with large residuals. You should post your Residual diagnostics graphs.

Overall, you have one possibility for a relationship, but your model of the relationship is not useful.

Last edited by Miner; 7th April 2012 at 10:54 AM.
Thank You to Miner for your informative Post and/or Attachment!
Sponsored Links

  Post Number #3  
Old 7th April 2012, 04:06 PM
staykov

 
 
Total Posts: 2
Re: How to interpret a Linear Regression in Minitab?

Thank you for your answer.
So do you suggest I should try to look for a relationship between other variables? What do I have to look for to get a better analysis?

p-values between 0.05 and 0.1 and high R^2 values?

Also, I am doing this over a 10-year period and checked whether I have some missing data, but this is not the case. Whatever I am testing I get unusual observations...
  Post Number #4  
Old 7th April 2012, 08:24 PM
Miner's Avatar
Miner

 
 
Total Posts: 3,772
Look! Re: How to interpret a Linear Regression in Minitab?

You begin by establishing your alpha value, or the level of risk that you are willing to tolerate of making a Type 1 error (rejecting the null hypothesis in error; See post 15 of this thread). If the p-value is less than alpha, you reject the null hypothesis (For linear regression, the null hypothesis is that the coefficient is zero).

If your alpha value is set at 0.10, you reject the null hypothesis. If set at 0.05, you fail to reject the null hypothesis. If this is exploratory analysis with low risk use 0.1. If you will make decisions of moderate risk, use 0.05. High risk, use 0.01.

Without seeing you data, I can only speculate. The problem might be missing variables, a curvilinear/nonlinear relationship, or both. Graphing the data will tell you whether you have a curvilinear (polynomial) or nonlinear relationship. If you do not, look for additional predictor variables.
Reply

Lower Navigation Bar
Go Back   The Elsmar Cove Business Systems and Standards Discussion Forums > Common Quality Assurance Processes and Tools > Quality Tools, Improvement and Analysis > Quality Assurance and Compliance Software Tools / Solutions > Using Minitab Software


Visitors Currently Viewing this Thread: 1 (0 Registered Visitors (Members) and 1 Unregistered Guest Visitors)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Forum Search
Display Modes Rate Thread Content
Rate Thread Content:

Forum Posting Settings
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Similar Discussion Threads
Discussion Thread Title Thread Starter Forum Replies Last Post or Poll Vote
Interpreting Linear Regression Results from Minitab stats_beginner Using Minitab Software 15 17th January 2014 05:42 PM
Linear Regression Formula with Four Variables to a Power Regression Formula nickcali825 Using Minitab Software 2 20th July 2012 10:29 PM
How to represent interactions in non-linear regression analysis in Minitab Saravanakumar Using Minitab Software 5 3rd March 2010 07:04 PM
Regression testing / Linear Analysis - Can you use dates in regression models? simplegirl00 Quality Assurance and Compliance Software Tools / Solutions 5 15th December 2008 07:16 PM
Linear Regression: What should be the appropriate value for R2 (R-Squared) parameter? Marcel Boere Gage R&R (GR&R) and MSA (Measurement Systems Analysis) 1 17th January 2001 07:15 PM



The time now is 06:39 PM. All times are GMT -4.
Your time zone can be changed in your UserCP --> Options.


 


NOTE: This forum uses "Cookies" -- The Elsmar Cove is *Copyright Free*.
A Peachfarm LLC Internet Property