DEFINITION of 'Stepwise Regression'
The stepbystep iterative construction of a regression model that involves automatic selection of independent variables. Stepwise regression can be achieved either by trying out one independent variable at a time and including it in the regression model if it is statistically significant, or by including all potential independent variables in the model and eliminating those that are not statistically significant, or by a combination of both methods.
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BREAKING DOWN 'Stepwise Regression'
Stepwise regression has a number of drawbacks, according to some statisticians. These include incorrect results, an inherent bias in the process itself and the necessity for significant computing power to develop complex regression models through iteration.
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