1 A multivariate regression question (40%) For the next questions, you need to use the data files that have training in the name. 1. Construct a linear model using the Dow 30 components as explanatory variables and Dow 30 index as response variable. Please select and use the best subset of 10 equities as predictors. State your selection method and explain why you chose it. Denote this model as Model 1 2. The ETFs training.csv file contains 4 ETF's returns XLF, XLE, XLK, XLB. The later 3 are the most influential ETF's for the Dow 30 index. Select any two of these ETFs. With the two selected as explanatory variables create the best model possible that can explain the return of Dow 30. To do this transform the X variables and/or Y variables. Explain every step. Denote the final model selected as Model 2. For the next questions, you need to use the testing data sets 11. Using Model 1 and Model 2 constructed previously and the actual returns of the two ETF's selected predict the Dow 30 index return values. Let the set of predicted values for the two models be denoted with Prediction 1 and Prediction . Denote the set of actual DJ30 returns (the y values) with Prediction. In total that gives 3 sets of numbers. 2. Perform pairwise t tests to determine if the DJ30 mean return is the same for the three sets. What is your confidence level? Is this correct since you are performing three tests at the same time? 3. Please test if the mean return is the same but this time use a One way ANOVA model and a multiple pairwise pro 1 A multivariate regression question (40%) For the next questions, you need to use the data files that have training in the name. 1. Construct a linear model using the Dow 30 components as explanatory variables and Dow 30 index as response variable. Please select and use the best subset of 10 equities as predictors. State your selection method and explain why you chose it. Denote this model as Model 1 2. The ETFs training.csv file contains 4 ETF's returns XLF, XLE, XLK, XLB. The later 3 are the most influential ETF's for the Dow 30 index. Select any two of these ETFs. With the two selected as explanatory variables create the best model possible that can explain the return of Dow 30. To do this transform the X variables and/or Y variables. Explain every step. Denote the final model selected as Model 2. For the next questions, you need to use the testing data sets 11. Using Model 1 and Model 2 constructed previously and the actual returns of the two ETF's selected predict the Dow 30 index return values. Let the set of predicted values for the two models be denoted with Prediction 1 and Prediction . Denote the set of actual DJ30 returns (the y values) with Prediction. In total that gives 3 sets of numbers. 2. Perform pairwise t tests to determine if the DJ30 mean return is the same for the three sets. What is your confidence level? Is this correct since you are performing three tests at the same time? 3. Please test if the mean return is the same but this time use a One way ANOVA model and a multiple pairwise pro