Source: Bloomberg
Source: Bloomberg
Excel’s FORECAST Function
Excel's FORECAST function is used to predict a future value based on existing values using linear regression. The function's equation is based on the formula for a linear trendline, which is: y=mx+b where: y is the depend ent variable (the value being forecast ed).
x is the independent variable (the input value for which the forecast is being made). m is the slope of the regression line. b is the y-intercept of the regression line.
The slope (m) and y-intercept (b) are calculated using the following formulas:
where: n is the number of data points.
∑(xy) is the sum of the product of each pair of x and y values.
∑x is the sum of the x values.
∑y is the sum of the y values.
∑(x2 ) is the sum of the squares of the x values.
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