The R-squared value is equal to 0.9929, indicating a good agreement between the calculated straight line and the source data. The straight line on the graph shows a steady increase in the quality of the manager's job. Note that in the linear approximation type data points are located very close to the line.
Add the R-squared value and the equation of a trendline (simply tick the box at the bottom of the «Options» window). Highlight the chart, select «Add Trendline». Let’s consider the conditional number of contracts concluded by a manager for 10 months:īased on the Excel spreadsheet data make a scatter chart (it will help illustrate a linear type): Hence, linear approximation is used to illustrate the indicator which increases or decreases at a constant rate. Its geometric representation is a straight line. It is necessary to choose the type of representation that will best illustrates the trend of changes in the data entered by the user. The R-squared value demonstrates that the choice has not been successful. In the example above the linear approximation has been chosen only for illustrating the algorithm. Note: that a trendline can not be added to the following types of charts and graphs: In our example, the choice of the linear approximation has given a low accuracy and poor result. If R2 = 1, the approximation error is zero. To this end, we need to extend the line and determine its values. It is used for making predictions based on statistical data. Trendline in Excel is an approximating function chart. Select the line type and enter R-squared value (the approximation accuracy value) in the chart.
For example, let’s take average oil prices since 2000 from open sources.
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