Can someone explain the difference between R-squared and ANOVA. According the the CFAI text, both explain how the independent variable explains the variation in the dependent variable. (p 260 and p271 Volume 1)?
Thanks
R^2 = (SST-SEE) / SST = RSS/SST
R^2 measures the amount of variation in the dependent variable EXPLAINED by the independent variable(s).
R^2 is calculated from the ANOVA table output.
ANOVA stands for “Analysis of Variance”. It is a topic, not a variable.
This is like the difference between an apple and an apple tree. The tree gives you fruits, shadow, flowers, wood. The fruit is the fruit. One of the tree’s results.
bec123 Wrote:
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> Passing BEC? Are you talking about the CPA exam?
yeah dude, isnt BEC one of the sections now. i passed the exam back in the day when it was a paper exam.
For one independent variable you could use correlation coefficient (r) to find COD or you can use ANOVA table
But for two or more independent variables you will need the ANOVA table to calculate COD.
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