Investments glossary

Line Of Best Fit

Line of best fit refers to a line through a scatter plot of data points that best expresses the relationship between those points. Statisticians typically use the least squares method to arrive at the geometric equation for the line, either though manual calculations or regression analysis software. A straight line will result from a simple linear regression analysis of two or more independent variables. A regression involving multiple related variables can produce a curved line in some cases.

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