Building a handrail for your deck may seem like a simple task. In many cases it is -- until the time arrives to figure out how to get the balusters or spindles evenly spaced along the handrail. Evenly spaced spindles improve the symmetry of the rails and lend a professional look to the project. But finding the right measuring formula may give the average home handyman pause.
R-squared is a statistical measurement that determines the proportion of a security's return, or the return on a specific portfolio of securities, that can be explained by variations in the stock market, as measured by a benchmark index.
R Squared and Adjusted R Squared. Regression analysis evaluates the effects of one or more independent variables on a single dependent variable. Regression arrives at an equation to predict performance based on each of the inputs. The R Squared and Adjusted R Squared values give the goodness of fit. Anything over 0.80 (80%) is considered a good fit. R Squared can be biased. So, Adjusted R Squared tweaks the R Squared based on degrees of freedom. Analysis: If R Squared is greater than 0.80, as it is in this case, there is a good fit to the data. Some statistics references recommend using the Adjusted R Squared value.In this example, R Squared of 0.980 means that 98% of the variation can be explained the independent variables.