Coefficient of Determination (R²) Formula and Explanation

The formula you provided is the coefficient of determination formula, which is used to measure the proportion of the total variation in the dependent variable that is explained by the independent variable(s).

Rﾲ = 1 - (SSE / SST)

Where: Rﾲ = Coefficient of determination SSE = Sum of Squared Errors (residuals) SST = Total Sum of Squares

The formula calculates Rﾲ by subtracting the ratio of the sum of squared errors (SSE) to the total sum of squares (SST) from 1. The SSE represents the variation in the dependent variable that is not explained by the independent variable(s), while the SST represents the total variation in the dependent variable.

The resulting Rﾲ value ranges from 0 to 1. A value of 0 indicates that the independent variable(s) do not explain any of the variation in the dependent variable, while a value of 1 indicates that the independent variable(s) perfectly explain all of the variation in the dependent variable. A higher Rﾲ value indicates a better fit of the regression model.