Scribd
Upload
332 views

Regression Analysis Project

This document presents a linear regression analysis of the relationship between 30-year mortgage interest rates (independent variable) and home prices (dependent variable) from 1988 to 2003. The regression results show a strong negative relationship between interest rates and home prices, with interest rates explaining 38.5% of the variability in home prices. ANOVA results and a p-value less than 0.05 indicate the regression model is statistically significant. In conclusion, there is a statistically significant negative linear relationship between 30-year mortgage interest rates and home prices over the period analyzed.

Uploaded by

Asif. Mahamud
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
332 views

Regression Analysis Project

This document presents a linear regression analysis of the relationship between 30-year mortgage interest rates (independent variable) and home prices (dependent variable) from 1988 to 2003. The regression results show a strong negative relationship between interest rates and home prices, with interest rates explaining 38.5% of the variability in home prices. ANOVA results and a p-value less than 0.05 indicate the regression model is statistically significant. In conclusion, there is a statistically significant negative linear relationship between 30-year mortgage interest rates and home prices over the period analyzed.

Uploaded by

Asif. Mahamud
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Regression

Analysis
Project Report

Name: Sovonesh Maity


Roll no: 23
MBA Sem I (2021-23)
Subject: Statistical Methods (GE
105)
Department of Business
Management Calcutta University
Problem Statement: Given the home-loan/ mortgage interest rate (independent
variable) for sixteen years, estimate the regression line for home prices (dependent
variable)

Linear Regression - One dependent variable

Mortgage interest rates and home prices

X VARIABLE Y VARIABLE

Year 30-year mortgage interest rate Home price


(%)

1988 10.30 $1,83,800

1989 10.30 $1,83,200

1990 10.10 $1,74,900

1991 9.30 $1,73,500

1992 8.40 $1,72,900

1993 7.30 $1,73,200

1994 8.40 $1,73,200

1995 7.90 $1,69,700

1996 7.60 $1,74,500

1997 7.60 $1,77,900

1998 6.90 $1,88,100

1999 7.40 $2,03,200

2000 8.10 $2,30,200

2001 7.00 $2,58,200

2002 6.50 $3,09,800

2003 5.80 $3,29,800

Average 7.75 $1,80,550


Scatter Plot:
$3,50,000

$3,00,000

$2,50,000
Home price

$2,00,000

y = -23409x + 393349
$1,50,000
R² = 0.3846

$1,00,000

$50,000

$0
0.00 2.00 4.00 6.00 8.00 10.00 12.00
30-year mortgage interest rate (%)

Regression Analysis:
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.620157
R Square 0.384595
Adjusted R Square 0.340638
Standard Error 41456.52
Observations 16

ANOVA
Significance
Df SS MS F F
Regression 1 1.5E+10 1.5E+10 8.749252 0.010382
Residual 14 2.41E+10 1.72E+09
Total 15 3.91E+10

Standard Upper Lower Upper


Coefficients Error t Stat P-value Lower 95% 95% 95.0% 95.0%
Intercept 393348.6 64595.45 6.089417 2.79E-05 254805.2 531892.1 254805.2 531892.1
30-year mortgage
interest rate (%) -23409.4 7914.176 -2.95791 0.010382 -40383.7 -6435.23 -40383.7 -6435.23
Interpreting of Results:
1. R-squared (R2) is a statistical measure that represents the proportion of the variance for
a dependent variable that's explained by an independent variable or variables in a
regression model. Whereas correlation explains the strength of the relationship between
an independent and dependent variable, R-squared explains to what extent the variance
of one variable explains the variance of the second variable.
2. ANOVA (Analysis of Variance) is a framework that forms the basis for tests of significance
& provides knowledge about the levels of variability within a regression model. It is the
same as Linear Regression but one of the major differences is Regression is used to
predict a continuous outcome on the basis of one or more continuous predictor
variables. Whereas, ANOVA is used to predict a continuous outcome on the basis of one
or more categorical predictor variables.
3. P-values and coefficients in regression analysis work together to tell us which
relationships in your model are statistically significant and the nature of those
relationships. The coefficients describe the mathematical relationship between each
independent variable and the dependent variable. The p-values for the coefficients
indicate whether these relationships are statistically significant.

Conclusion:
Multiple R = 0.6202. It denotes a strong relationship between X and Y.
R Square = 0.3846. It means that 38.5% of the variability of Y is explained by X.
Overall regression: right-tailed
F = 8.7493
p-value = 0.01038
Since p-value is less than α (0.05), we reject the H0.
The linear regression model, Y = b0+ b1X + ε, provides a better fit than the model without
the independent variable resulting in, Y = b0 + ε.
The linear regression model assumes normality for residual errors. Shapiro will p-value
equals 0.09659. It is assumed that the data is normally distributed.
Note: The relation between x and y variants is negative in nature as the correlation is
negative.

You might also like