In statistics, **R-squared** (R^{2}) measures the proportion of the variance in the that can be explained by the predictor variable in a regression model.

We use the following formula to calculate R-squared:

R^{2} = [ (nΣxy – (Σx)(Σy)) / (√nΣx^{2}-(Σx)^{2} * √nΣy^{2}-(Σy)^{2}) ]^{2}

The following step-by-step example shows how to calculate R-squared by hand for a given regression model.

**Step 1: Create a Dataset**

First, let’s create a dataset:

**Step 2: Calculate Necessary Metrics**

Next, let’s calculate each metric that we need to use in the R^{2} formula:

**Step 3: Calculate R-Squared**

Lastly, we’ll plug in each metric into the formula for R^{2}:

- R
^{2}= [ (nΣxy – (Σx)(Σy)) / (√nΣx^{2}-(Σx)^{2}* √nΣy^{2}-(Σy)^{2}) ]^{2} - R
^{2}= [ (8*(2169) – (72)(223)) / (√8*(818)-(72)^{2}* √8*(6447)-(223)^{2}) ]^{2} - R
^{2}= 0.6686

**Note:** The *n* in the formula represents the number of observations in the dataset and turns out to be n = 8 observations in this example.

Assuming *x* is the predictor variable and *y* is the response variable in this regression model, the R-squared for the model is **0.6686**.

This tells us that 66.86% of the variation in the variable *y* can be explained by variable *x*.