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

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What are some of the more common types of regressions investors can use?
The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >>

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