Least Squares Trend Of Forecasting

Least Squares Trend Of Forecasting

Least squares are a mathematical technique of fitting a trend to data points. The resulting line of best fit has the following properties: (1) the summation of all vertical deviations about it is zero, (2) the summation of all vertical deviations squared is a minimum, and (3) the line goes through the means X and Y. For linear equations, the line of best fit is found by the simultaneous solution for a and b of the following two normal equations:

                        ∑Y = na b∑X

∑XY = a∑Xb∑X²