doesn t account for outliers
equations from the line of best fit may be determined by computer software models which include a summary of outputs for analysis where the coefficients and summary outputs explain the dependence of the variables being tested example of the least squares methodhere s a hypothetical example to show how the least square method works let s assume that an analyst wishes to test the relationship between a company s stock returns and the returns of the index for which the stock is a component in this example the analyst seeks to test the dependence of the stock returns on the index returns to achieve this all of the returns are plotted on a chart the index returns are then designated as the independent variable and the stock returns are the dependent variable the line of best fit provides the analyst a line showing the relationship between dependent and independent variables 