Coefficient of Determination (R2) (Statistics) A common measure of the “Goodness of Fit” in Regression Analysis used to assess the degree of causation between two variables or between one or more independent variables and a single dependent variable. The coefficient of determination is equivalent to the square of the Correlation Coefficient (R) and reflects the percent of variation in the dependent (explained) variable that is explained by the variations in the independent (explanatory) variable(s). Unlike the correlation coefficient, the coefficient of determination does make an inference of causation, i.e., the changes in one variable do affect changes in another. The value of the coefficient of determination various between 0 (0 percent) and 1 (100 percent) with higher numbers representing better explanatory powers of a model in explaining the trends in historical data.
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