### Definition: What is R-squared?

**R-squared** also called the coefficient of determination. Between the investment’s performance and specific benchmark index, this measurement is the correlation. In other words, it is used to shows what degree a portfolio’s performance can be attributed to the benchmark index.

This linear regression is used to determine how well does a line follow the variations within a set of data. At the time of comparing the model, it is used to determine how well the line fit to the data set of observation.

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