Statistical modelling to make predictions
A rule built from past data, like a regression line, that uses the relationship between variables to estimate new values. A strong r makes the estimates more reliable.
Understanding Statistical modelling to make predictions in VCE Data Analytics U3O1
What it does: The regression line is y = slope * x + intercept. Both are worked out from past data, then x = 5 is put in to estimate y. ABS gives the strength of r whether it is positive or negative. The closer it is to 1, the more reliable the model's estimates will be. The line lets you estimate new values. It shows a relationship, not proof of cause (correlation is not causation). Estimates inside the range of the data (interpolation) are safer. Going far outside the range assumes the pattern continues, which may not be true. Substitute x = 4: y = 5 × 4 + 40 = 60. Remember the model gives an estimate, not a guaranteed result.
Common mistakes: The regression line is y = mx + c. The slope m must be multiplied by x, then c added: estimate = m * 10 + c. FORECAST needs the known y values first, then the known x values. The ranges are swapped, so it should be =FORECAST(10, B2:B9, A2:A9).
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