In statistics, linear regression models the relationship between a dependent variable and one or more explanatory variables using a linear function. If two or more explanatory variables have a linear relationship with the dependent variable, the regression is called a multiple linear regression. Multiple regression, on the other hand, is a broader class of regressions that encompasses linear and nonlinear regressions with multiple explanatory variables.
Regression analysis is a common way to discover a relationship between dependent and explanatory variables. However, this statistical relationship does not mean that the explanatory variables cause the dependent variable; it rather speaks of some significant association in the data. Linear regression attempts to draw a line that comes closest to the data by finding the slope and intercept that define the line and minimize regression errors. However, many relationships in data do not follow a straight line, so statisticians use nonlinear regression instead.
It is rare that a dependent variable is explained by only one variable. In this case, an analyst uses multiple regression, which attempts to explain dependent variable using more than one independent variable. Multiple regressions can be linear and nonlinear.
Consider an analyst who wishes to establish linear relationship between the daily change in a company's stock prices and other explanatory variables such as the daily change in trading volume and the daily change in market returns. If he runs a regression with the daily change in the company's stock prices as a dependent variable and the daily change in trading volume as an independent variable, this would be an example of a simple linear regression with one explanatory variable. If the analyst adds the daily change in market returns into the regression, it would be a multiple linear regression.

How can I create a linear regression in Excel?
Learn the steps involved in creating a linear regression chart in Microsoft Excel. A linear regression is a data plot that ... Read Answer >> 
How Do Fixed and Variable Costs Affect the Marginal Cost of Production?
Learn about the marginal cost of production and how it is affected by changes in fixed and variable costs. Read Answer >>

Trading
The Linear Regression of Time and Price
This investment strategy can help investors be successful by identifying price trends while eliminating human bias. 
Trading
When Is A Bull Market Not A Bull Market?
During some bull or bear moves in the stock markets, investors will be going with the trend, but day traders may find they cannot. 
Financial Advisor
How Do Companies Forecast Oil Prices?
Read about the different forecasting methods that businesses use to predict future crude oil prices, and why it's so difficult to guess correctly. 
Investing
The Restoration of Restoration Hardware Continues
Restoration Hardware reported strong quarterly results that beat expectations, advancing its turnaround story. 
Investing
Analog Devices' Linear Purchase Clears Last Hurdle
The longsimmering acquisition of Linear Technology (NASDAQ: LLTC) by Analog Devices (NASDAQ: ADI) is almost complete. Analog Devices announced Monday that China's Ministry of Commerce has signed ... 
Investing
Arbitrage Pricing Theory: It's Not Just Fancy Math
What are the main ideas behind arbitrage pricing theory? Find out how this model estimates the expected returns of a welldiversified portfolio. 
Investing
What's the Correlation Coefficient?
The correlation coefficient is a measure of how closely two variables move in relation to one another. If one variable goes up by a certain amount, the correlation coefficient indicates which ... 
Financial Advisor
Calculating Beta: Portfolio Math For The Average Investor
Beta is a useful tool for calculating risk, but the formulas provided online aren't specific to you. Learn how to make your own. 
Investing
Looking Into Nike 3Q Earnings Results
Nike shares fell over 6% after the company reported thirdquarter earnings of 68 cents a share. 
Investing
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario.

Regression
A statistical measure that attempts to determine the strength ... 
Nonlinear Regression
Nonlinear regression is a form of regression analysis in which ... 
Line Of Best Fit
The line of best fit is an output of regression analysis that ... 
Stepwise Regression
Stepwise regression is the stepbystep iterative construction ... 
Hedonic Regression
Hedonic regression is a method used in economics to determine ... 
Homoskedastic
Homoskedastic refers to a condition in which the variance of ...