Question

MONTH DJIA STOCK 1 STOCK 2 1 11,168 48.5 32.4 2 11,150 48.2 31.7 3 11,186 44.5 31.9 4 11,381 44.7 36.6 5 11,679 49.3 36.7 6 12,081 49.3 38.7 7 12,222 46.1 39.5 8 46.2 41.2 9 47.7 43.3 12,463 12,622 12,269 12,354 10 48.3 39.4 11 47.0 40.1 12 47.9 42.1 13,063 13,326 13 47.8 45.2

Question 1) Predict DJIA (DV) based on the prices of STOCK 1 and STOCK 2 (IVs) using multiple regression analysis

Answer 1

1.

We do it excel:

enter data > data > analyse > data analysis > regression > enter DJIA as y and enter stocks as X > select all plots > OK

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.963342008	Correlation
R Square	0.928027825	coeff of determination i.e., stocks explain 92.8% variability in DJIA
Adjusted R Square	0.91363339
Standard Error	211.8373579
Observations	13
ANOVA
	df	SS	MS	F	Significance F
Regression	2	5786307.03	2893154	64.47129	1.93118E-06	<0.05 (significant)
Residual	10	448750.6618	44875.07
Total	12	6235057.692
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	4599.576017	1877.488945	2.449855	0.034266	416.2699549	8782.88208	<0.05 (significant)
Stock1	29.6692056	39.44522678	0.752162	0.469288	-58.22023672	117.5586479	>0.05 (insignificant)
Stock2	158.1959016	14.2034776	11.13783	5.87E-07	126.5485814	189.8432219	<0.05 (significant)

Equation: DJIA = 4599.58 + 29.669 Stock1 + 158.196 Stock2

Plots:

Normal Probability Plot 14000 13000 DJIA 12000 11000 0 20 100 120 40 60 80 Sample Percentile

The DJIA is approximately normal

Stock1 Line Fit Plot 15000 10000 DJIA 5000 DJIA Predicted DJIA 0+ 44 46 48 50 Stock1

No significant relationship

Stock2 Line Fit Plot 15000 10000 DJIA 5000 DJIA Predicted DJIA 0 0 40 60 20 Stock2

Signficant linear relationship

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