What is a Good R-Squared Value or Is the Fit Good for a Trend Line?


You’ve probably heard the rule of thumb that if R-squared is .7 or better then the trend line has a good fit to data and in general the higher R-squared is the better it is. However, there are several different types of correlation coefficients and each is appropriate under different conditions. A good approachable article on this is at the Stats with Cats blog. (Yes, that is the real name.) A good blog to start with at the site is,

Secrets of Good Correlations
< http://statswithcats.wordpress.com/2010/11/28/secrets-of-good-correlations/>

And yes, the pictures of cats with Negative Feline Correlation, No Feline Correlation, and Positive Feline Correlation are funny.

Positive Feline Correlation

Positive Feline Correlation

You can display the R-squared value on the trend line in your chart by selecting the Display R-squared value on chart check box in the Format Trendline dialog box. This puts the R-squared value as text in a floating box. If you want to move it, just drag it. To delete it, select it, then delete.

Learn how a good correlation does not imply causation.

Learn how to create a trendline in a chart or TREND data in a worksheet.

Learn how to extend a TREND line to create a forecast.

Learn how to show or hide a TREND line under the check box control.