Originally Posted by

**Dragan**
Yes, to part 1 - I know that Minitab will does this. I'm sure that other software packages will also do this e.g. SAS will run a regression without a constant term.

Perhaps the important implication of forcing the regression model to not have a constant term is that it may produce a set of error terms that do not sum to zero. If you force the error terms to sum zero then you have - in simple regression terms - a biased estimate the regression coefficient i.e. the estimate would be b_1=YBar/Xbar.

In terms of protfolio theory, you could run both regressions i.e. with and without a constant and look to see if the constant term is (statistically) significant different from zero. If it is not, then use the model without the constant term. Using the model without the constant term would result with regression weight that has better precision i.e. a confidence interval (CI) that is narrower than the CI associated with model that includes the constant term.