Coefficient of Determination

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Definition of 'Coefficient of Determination'

The coefficient of determination, also known as the coefficient of multiple determination, is a measure of how well a regression model fits the data. It is calculated as the square of the correlation coefficient between the predicted values and the actual values. The coefficient of determination can be interpreted as the proportion of the variance in the dependent variable that is explained by the independent variables. A coefficient of determination of 1 indicates that the model perfectly fits the data, while a coefficient of determination of 0 indicates that the model does not explain any of the variance in the dependent variable. The coefficient of determination is a useful tool for evaluating the performance of a regression model and for comparing different models.

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