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Regression and Correlation Assumptions

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1) When is regression used? What are the assumptions of Linear Regression?
2) What is correlation? How does it differ from regression? What is the interpretation of the correlation coefficient?

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1) When is regression used? What are the assumptions of Linear Regression?

Correlation and regression analysis are both used to investigate relationships between two variables (x and y).

In a linear regression, you fit the data to a model of the form

where α and β are the parameters of the model (the y-intercept and the slope of the line) and ε is the error term (each data point has a corresponding εi term, which shows how far away from the line the point falls).

You assume ...

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