Multiple linear regression

The strength of regression as a forecasting method is that it capitalizes on historical relations between the predicted (dependent) and predictor (independent) variable. It uses all the information in the historical data pairs to determine the future values of the predicted variables. Its major limitation is that the predicted values of the independent variable must be free from error or uncertainty, i.e., the only possible error or uncertainly is in values of the dependent variable. Often these assumptions is questionable. The method assumes that all past history data pairs are equally important. The method fundamentally generates a “regression forecast”.