Linear Relationship

Filed Under » ,
Dictionary Says

Definition of 'Linear Relationship'

A statistical term used to describe the relationship between a variable and a constant. Linear relationships can be expressed in a graphical format where the variable and the constant are connected via a straight line or in a mathematical format where the independent variable is multiplied by the slope coefficient, added by a constant, which determines the dependent variable.
Investopedia Says

Investopedia explains 'Linear Relationship'

For example, assume that the independent variable is the size of a house (as measured by square footage), determines the market price of a home (the dependent variable), when it is multiplied by the slope coefficient of 207.65 and is then added to the constant term $10,500. If a home's square footage is 1,250 then the market value the home is $270,062.50. Graphically, and mathematically:

Linear Relationship


In this example, as the size of the house increases, the market value of the house increases in a linear fashion.
Search results for

'Linear Relationship'

  • Commodities: The Portfolio Hedge

    http://www.investopedia.com/articles/trading/05/021605.asp
    ... If there is perfect linear relationship, you'll have a correlation coefficient of
    1. A positive correlation means that when one variable has a high (low) value ...

  • CFA Level 1 Study Guide - Quantitative Methods - Correlation and ...

    http://www.investopedia.com/exam-guide/cfa-level-1/quantitative-methods/correlation-regression.asp
    ... 10.5 Finding Shenanigans. Chapter 11 - 15: 11. Corporate Finance: 11.1 Introduction;
    11.2 Agent-Principle Relationship; 11.3 Capital Budgeting Basics; ...

  • The Capital Asset Pricing Model: An Overview

    http://www.investopedia.com/articles/06/CAPM.asp
    ... Fischer Black, Michael C. Jensen and Myron Scholes confirmed a linear relationship
    between the financial returns of stock portfolios and their betas. ...

  • The Capital Asset Pricing Model: An Overview

    http://www.investopedia.com/articles/06/capm.asp
    ... Fischer Black, Michael C. Jensen and Myron Scholes confirmed a linear relationship
    between the financial returns of stock portfolios and their betas. ...

  • Use Duration And Convexity To Measure Bond Risk

    http://www.investopedia.com/articles/bonds/08/duration-convexity.asp
    ... interest rate sensitivity. The statistic calculates a linear relationship
    between price and yield changes in bonds. In reality, the ...

  • How International Tax Rates Impact Your Investments

    http://www.investopedia.com/articles/04/071404.asp
    ... It appears there was an almost linear relationship between tax burden and
    index returns (see dashed dark red and green lines). If ...

  • CFA Level 1 Study Guide - Quantitative Methods - Advanced ...

    http://www.investopedia.com/exam-guide/cfa-level-1/quantitative-methods/advanced-probability.asp
    ... 10.5 Finding Shenanigans. Chapter 11 - 15: 11. Corporate Finance: 11.1 Introduction;
    11.2 Agent-Principle Relationship; 11.3 Capital Budgeting Basics; ...

  • Finding The Best Yields

    http://www.investopedia.com/articles/basics/10/finding-the-best-yields.asp
    ... While the relationship of yields of corporate bonds can at times appear to have
    a linear relationship, the same emotions and subsequent volatilities often ...

  • Achieving Better Returns In Your Portfolio

    http://www.investopedia.com/articles/05/021705.asp
    ... known as the capital asset pricing model (CAPM), implies that there is a linear
    relationship between an asset's expected return and its corresponding beta. ...

  • The Linear Regression Of Time and Price

    http://www.investopedia.com/articles/trading/09/linear-regression-time-price.asp
    ... Linear regression analyzes two separate variables in order to define a single
    relationship. In chart analysis, this refers to the variables of price and time. ...

Related Articles

Partner Links