Question

In an effort to determine whether any correlation exists between the price of stocks of airlines, an analyst sampled six days of activity of the stock market spread out over 4 months. Using the following prices of Delta stock and Southwest stock, compute the coefficient of correlation. Stock prices have been rounded off to the nearest tenth for ease of computation.

Delta	Southwest
45.96	38.76
46.6	45.41
47.93	16.0
51.78	49.58
52.17	44.34
47.46	17.8

(Round the intermediate values to 2 decimal places. Round your answer to 3 decimal places.)

Answer 1

The statistical software output for this problem is:

Simple linear regression results: Dependent Variable: Southwest Independent Variable: Delta Southwest = -75.781552 + 2.2835879 Delta Sample size: 6 R (correlation coefficient) = 0.41464691 R-sq = 0.17193206 Estimate of error standard deviation: 14.942581

Hence,

Correlation coefficient = 0.415