R-squared (R2) is defined as a number that tells you how well the independent variable(s) in a statistical model explain the variation in the dependent variable. It ranges from 0 to 1, where 1 indicates a perfect fit of the model to the data.

R-squared is a statistical measure that indicates how much of the variation of a dependent variable is explained by an independent variable in a regression model.

In investing, R-squared is generally interpreted as the percentage of a fund’s or security’s price movements that can be explained by movements in a benchmark index.