ANOVA (Analysis of Variance) Table

ANOVA (Analysis of Variance) Table provides data on the source of variation in the dependent variable (e.g. stock returns).

• Degree of freedom for the regression sum of squares (a.k.a., the "explained sum of squares") = k (the number of independent variables)
• Degree of freedom for the error sum of squares = N - k - 1
• Degree of freedom for the total sum of squares(*) = N - 1

(*)The total sum of squares equals the numerator of the sample variance formula for the dependent variable. The denominator in the sample variance (N-1) equals the degrees of freedom for the numerator (the total sum of squares).