Stepwise Regression

  

Categories: Accounting

Every relationship you've ever had has ended badly. Fights. Ugly breakups. Snarky fights over Twitter. You've decided to make a scientific study of...why.

As part of this project, you figure out some quantitative measures to track various potential variables that could explain why everyone you've dated has eventually broken up with you. You are going to track your Personality Quotient, your Hygiene Variable, your Attractiveness Factor, and a few other more minor factors.

To discover the main cause of your love troubles, you're going to use stepwise regression. It's a statistical technique that uses regression models to test each variable in turn.

First, you run the numbers on the Personality Quotient. Then you go through the process looking at the Hygiene Variable...and so on through the list. The name "stepwise regression" comes from the fact that you run the possibilities in a step-by-step manner, taking it one variable at a time.

Related or Semi-related Video

Finance: What is Hurdle Rate?62 Views

00:00

Finance allah shmoop shmoop what is ah hurdle rate Well

00:06

a hurdle rate refers to the investment return minimum that

00:10

an investment project requires for it to be worth taking

00:15

the risk and effort to do it in the first

00:17

place All right what does that really mean Well you're

00:20

the new ceo of baby's first chainsaw inc a project

00:23

manager present to you the opportunity to open a new

00:27

line of business called grand pas last chain saw going

00:31

into that business will cost you one hundred million box

00:33

of initial investment in large print labeling walker accessible attachments

00:38

jittery hand stabilizers and some extra denture cream You as

00:43

ceo are looking at eight other projects you can afford

00:47

to do on ly one and the best of the

00:50

eight other projects is a similar product called the unhinged

00:54

midlife crisis chainsaw which has been garnering a lot of

00:58

early interest That project has return rate of fourteen percent

01:02

so the project manager presenting grandpas last chainsaw now has

01:06

a hurdle rate that must be above the highest last

01:10

hurdle or fourteen percent fourteen percent annualized return got it

01:14

and that's as presented by the project manager pitching investment

01:18

in the mid life crisis model meaning they think it'll

01:21

return fourteen percent a year on the investment Got it

01:24

Whichever of those eight competitive project managers presents the most

01:28

believable projections for sales and profits that exceed the others

01:32

well they'll soon become king of the family chainsaw market

01:36

And the ones who don't well let's just say they 00:01:38.855 --> [endTime] use a few extra bodies over in product development

Up Next

Finance: What is Regression Analysis?
7 Views

What is Regression Analysis? Regression is a form of statistical analysis that goes back to trading history and isolating a particular variable to...

Find other enlightening terms in Shmoop Finance Genius Bar(f)