how is a line of best fit used in finance 
for financial analysts the method of estimating a line of best fit can help to quantify the relationship between two or more variables such as a stock s share price and its earnings per share eps by performing this type of analysis investors often try to predict the future behavior of stock prices or other factors by extrapolating that line out in time the bottom linea line of best fit estimates the one line that minimizes the distance between it and observed data estimating a line of best fit is a key component of regression analysis in statistics in order to infer the relationships between some dependent variable and one or more explanatory variables in finance the line of best fit is utilized in this way to conduct econometric studies and in certain tools used in technical analysis 