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Chapter 15. Using Regression to Track Tr... > Working with a Power Trend

Working with a Power Trend

The exponential and logarithmic trendlines are both “extreme” in the sense that they have radically different velocities at different parts of the curve. The exponential trendline begins slowly and then takes off at an ever-increasing pace; the logarithmic trendline shoots off the mark and then levels off.

Most measurable business scenarios don't exhibit such extreme behavior. Revenues, profits, margins, and employee head count often tend to increase steadily over time (in successful companies, anyway). If you're analyzing a dependent variable that increases (or decreases) steadily with respect to some independent variable, but the linear trendline doesn't give a good fit, you should try a power trendline. This is a pattern that curves steadily in one direction. To give you a flavor of a power curve, consider the graphs of the equations y = x2 and y = x–0.25 in Figure 15.28. The y = x2 curve shows a steady increase, while the y = x–0.25 curve shows a steady decrease.


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