How to Run the Regression Analysis in MS Excel / Step by Step

First, we know what is Regression, we say that linear regression is a statistical method that allows you to summarize and study the relationship between two or more variables. In this type of regression, you have a dependent variable and an independent variable.

The relationship between the variables is modeled as a straight line (hence, “linear”) and is expressed by the equation:

Y=b0+b1X+εY=b0​+b1​X+ε

where:

• Y is the dependent variable.
• X is the independent variable.
• bo​ is the y-intercept (the value of Y when X is 0).
• b1​ is the slope of the line, representing the change in Y for a one-unit change in X.
• εε is the error term, accounting for the variability in Y that is not explained by X.

Step 1: Ensure the Data Analysis Tool is Enabled

If you don’t see the Data Analysis Tool in the Data tab, you might need to enable it:

1. Go to the “File” tab.
2. Select “Options.”
3. In the Excel Options dialog box, click on “Add-ins.”
4. select “Excel Add-ins” in the Manage box and click “Go.”
5. Check “Analysis ToolPak” and then click “OK.”

Step 2: Input Your Data

1. Organize your data with the independent variable (X) in one column and the dependent variable (Y) in another.
2. Make sure each column has a header.

Step 3: Open Data Analysis Tool

1. Go to the “Data” tab.
2. Click on “Data Analysis” in the Analysis group. If you don’t see it, you must enable the Analysis ToolPak.

Step 4: Choose Regression Analysis

1. In the Data Analysis dialog box, select “Regression.”
2. Click “OK.”

Step 5: Set Up Regression Dialog Box

1. In the Regression dialog box:
   • Input Range: Select the range of your data (including headers).
   • Output Range: Choose where you want the output displayed (e.g., a new sheet).
   • Labels: Check the box if your data has headers.
2. Click “OK.”

Step 6: Interpret Results

The output will include various statistics, including the coefficients of the regression equation, standard errors, and p-values. Look for the “Coefficients” table, and the values in the “Intercept” and “X Variable 1” columns are the coefficients (b0​ and b1​) for the linear regression equation.

Step 7: Create a Scatter Plot with the Regression Line (Optional)

You can create a scatter plot with the regression line for a visual representation:

1. Select your data.
2. Go to the “Insert” tab.
3. Click on “Scatter” in the Charts group.
4. Right-click on the chart and choose “Add Trendline.”
5. Choose “Linear” and display the equation and R-squared value if desired.