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The concept of residuals in regression analysis, their importance, and how to interpret them. It also provides instructions on creating a residual plot using statistical software.
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Error = observed - predicted
Also known as Residual plot - plots the residuals on the vertical axis against the explanatory variable on the horizontal axis A residual plot helps us determine how well a regression line fits the data. Important property of residuals their sum = zero
Scatter Plot 0 Residual Plot
Analyzing residual plots: ÿ A curved pattern shows the overall pattern is not linear therefore the regression line is not a good model. ÿ (^) A megaphone pattern will be less accurate for larger values of x. ÿ (^) Ideal residuals are scattered.
Interpretation of the residual. The regression line overpredicts/underpredicts the name of y by residual units of y.