To predict future values based on historical data, an analyst must determine the mathematical relationship between two variables—typically time (independent variable) and revenue (dependent variable). This is the foundation of linear regression.
The REGR_SLOPE function is a linear regression function that calculates the slope of the "least squares" regression line for non-null pairs in a group. In the context of sales forecasting, the "slope" represents the rate of change in revenue over time. By calculating the slope, an analyst can project that trend forward to estimate what the revenue will be at a future date (the end of the year).
Evaluating the Options:
Option A (CORR) measures the correlation coefficient, which tells you how strongly two variables are related (between -1 and 1), but it does not provide a mathematical formula to predict a specific future value.
Option C (COVAR_SAMP) calculates the sample covariance, which indicates the direction of a linear relationship but not the magnitude or slope required for prediction.
Option D (VARIANCE) is a descriptive statistic that measures data spread (how far numbers are from the mean) and is not used for trend projection or prediction.
Option B is the 100% correct answer. Along with REGR_INTERCEPT, REGR_SLOPE allows the analyst to build the linear equation $y = mx + b$ to perform predictive analytics.
Contribute your Thoughts:
Chosen Answer:
This is a voting comment (?). You can switch to a simple comment. It is better to Upvote an existing comment if you don't have anything to add.
Submit