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Correlation and simple linear regression

Quantitative methods · Lesson 5 of 5

Lesson 5 of 5

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Lesson 5 of 5 · Quantitative methods

Correlation and simple linear regression

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By the end you’ll be able to

Calculate and interpret the sample correlation coefficient and distinguish correlation from causation.
Describe the assumptions of simple linear regression and the roles of the dependent and independent variables.
Estimate and interpret the slope coefficient and intercept in a simple linear regression model.

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Evaluate regression results using measures such as the coefficient of determination and assess the statistical significance of regression coefficients.

Identify limitations of correlation and simple linear regression in investment applications, including sensitivity to outliers and model misspecification.

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