4) Adding a Trend Line to a Scatter Plot.

This Blog entry is from the Linear Regression section in Learn Palisade.

The scatter plot example created is visually difficult to inspect, there is just about a relationship depicted, but it is shallow and the direction of relationship not immediately obvious. 

Excel can help by adding a trend line which, at this stage at least, will give a general indication of relationship and direction of that relationship.  In fact, this is an implementation of one-way linear regression, covered in more depth in this module.

 Hover over the chart created by StatTools, then right click:

1.png

Click the sub menu item Trend Line:

2.png

A trend line is drawn that shows a very slight relationship, however it would be reasonable to conclude that the relationship is slim to non-existent in this data.  Financial market data is however notoriously difficult to forecast, hence performing this analysis across a wider array of variables and bringing several variables together is required for the purposes of predictive modelling.