Chapter 12 Case Problem Simple Linear Regression Modeling Investors are continually looking for ways to predict the closing price of the Dow Jones Industrial Average (DJIA). The DJIA is a price-weighted index of 30 large corporations that are representative of different sectors of the U.S. economy, such as financial services, manufacturing and information technology. The price of gold per ounce is thought to influence what the closing price of the DJIA will be for any given time period. Thus, investors believe that there is a relationship between the closing price of gold and the closing price of the DJIA The closing price data for both gold and the DJIA was collected over several days to test if there is in fact a relationship between the closing price of gold and the closing price of the DJIA. Below is a sample of the data from the data set. The variable 'Gold Price' represents the closing price for gold for that given day. The variable 'Dow Jones Close' is the closing price for the Dow Jones Industrial Average for that given day. Gold Dow Jones Price 1,282.50 1,283.40 1,278.10 1,253.30 Close 20,603.31 20,404.49 20,591.86 20,662.95 1,251.20 20,663.22 Download the complete data set from the course website. Create a Managerial Report summarizing and analyzing the data set. Construct a descriptive summary for each variable in the data set. Is this data set a good data set for simple linear regression? Explain. Use regression analysis to develop an estimated regression equation that could be used to predict the closing price of the DJIA based on the closing price of gold What conclusions and recommendations can you derive from your analysis using an alpha of 0.05? What would be the predicted closing price of the DJIA if the price of gold closes at $1280.88? 1. 2. 3. 4 Gold Price Dow Jones 1,282.50 20,603.31 20,404.49 20,523.28 20,636.92 20,453.25 20,591.86 f 1,283.40 1,294.10 1,291.90 1,288.50 1,278.10 1,274.20 20,651.30 1,253.90 20,658.02 1,257.30 20,656.10 1:253.30 20,662.95 1,248.50 20,648.15 1,258 40 20,689.24 20,650.21 20,663.22 1,254.00 1,251.20 1,248.00 20,728.49 1,256.80 20,659.32 1,258.80 20,701.50 1,258.80 20,550.98 1,251.70 20,596.72 1,250.10 20,656.58 1,252.80 1,249.60 20,661.30 20,668.01 1,237.20 20,905.86 1,233.20 20,914.62 1,230.20 20,934.55 1,203.80 20,950.10 1,201.90 20,837.37 1,202.40 20,881.48 1,200.70 20,902.98 1,202.40 20,858.19 20,855.73 1,208.50 1,215.10 20,924.76 1,224.50 20,954.34 1,225.50 21,005.71 1,231.90 21,002.97 1,231.90 21,002.97 1,248.90 21,115.55 1,252.60 20,812.24 1,257.40 20,837.44 1,256.90 20,821.76 1,250.20 20,810.32 1,232.00 20,775.60 1,237.50 20,743.00 1,237.60 20,624.05 1,240.00 20,619.77 1,231.70 20,611.86 1,223.90 20,504.41 1,224.40 20,412.16 1,234.40 20,269.37 1,235.10 20,172.40 1,237.60 20,054.34 1,234.20 1,230.00 1,218.50 20,090.29 20,052.42 20,071.46 1,216.70 19,884.91 1,205.60 19,890.94 1,208.60 19,864.09 1,193.20 19,971.13 1,188.10 20,093.78 1,189.50 20,100.91 1,197.30 20,068.51 1,210.30 19,912.71 1,215.00 19,799.85 1,204.30 19,827.25 1,200.90 19,732.40 1,211.30 19,804.72 1,212.00 19,826.77 1,195.30 19,885.73 1,198.90 19,891.00 1,195.60 19,954.28 1,184.20 19,855.53 1184.20 1,183.50 19,855.53 19,887.38 1,171.90 19,963.80 1,179.70 19,899.29 1,163.80 19,942.16 1,160.40 19,881.76 Chapter 12 Case Problem Simple Linear Regression Modeling Investors are continually looking for ways to predict the closing price of the Dow Jones Industrial Average (DJIA). The DJIA is a price-weighted index of 30 large corporations that are representative of different sectors of the U.S. economy, such as financial services, manufacturing and information technology. The price of gold per ounce is thought to influence what the closing price of the DJIA will be for any given time period. Thus, investors believe that there is a relationship between the closing price of gold and the closing price of the DJIA The closing price data for both gold and the DJIA was collected over several days to test if there is in fact a relationship between the closing price of gold and the closing price of the DJIA. Below is a sample of the data from the data set. The variable 'Gold Price' represents the closing price for gold for that given day. The variable 'Dow Jones Close' is the closing price for the Dow Jones Industrial Average for that given day. Gold Dow Jones Price 1,282.50 1,283.40 1,278.10 1,253.30 Close 20,603.31 20,404.49 20,591.86 20,662.95 1,251.20 20,663.22 Download the complete data set from the course website. Create a Managerial Report summarizing and analyzing the data set. Construct a descriptive summary for each variable in the data set. Is this data set a good data set for simple linear regression? Explain. Use regression analysis to develop an estimated regression equation that could be used to predict the closing price of the DJIA based on the closing price of gold What conclusions and recommendations can you derive from your analysis using an alpha of 0.05? What would be the predicted closing price of the DJIA if the price of gold closes at $1280.88? 1. 2. 3. 4 Gold Price Dow Jones 1,282.50 20,603.31 20,404.49 20,523.28 20,636.92 20,453.25 20,591.86 f 1,283.40 1,294.10 1,291.90 1,288.50 1,278.10 1,274.20 20,651.30 1,253.90 20,658.02 1,257.30 20,656.10 1:253.30 20,662.95 1,248.50 20,648.15 1,258 40 20,689.24 20,650.21 20,663.22 1,254.00 1,251.20 1,248.00 20,728.49 1,256.80 20,659.32 1,258.80 20,701.50 1,258.80 20,550.98 1,251.70 20,596.72 1,250.10 20,656.58 1,252.80 1,249.60 20,661.30 20,668.01 1,237.20 20,905.86 1,233.20 20,914.62 1,230.20 20,934.55 1,203.80 20,950.10 1,201.90 20,837.37 1,202.40 20,881.48 1,200.70 20,902.98 1,202.40 20,858.19 20,855.73 1,208.50 1,215.10 20,924.76 1,224.50 20,954.34 1,225.50 21,005.71 1,231.90 21,002.97 1,231.90 21,002.97 1,248.90 21,115.55 1,252.60 20,812.24 1,257.40 20,837.44 1,256.90 20,821.76 1,250.20 20,810.32 1,232.00 20,775.60 1,237.50 20,743.00 1,237.60 20,624.05 1,240.00 20,619.77 1,231.70 20,611.86 1,223.90 20,504.41 1,224.40 20,412.16 1,234.40 20,269.37 1,235.10 20,172.40 1,237.60 20,054.34 1,234.20 1,230.00 1,218.50 20,090.29 20,052.42 20,071.46 1,216.70 19,884.91 1,205.60 19,890.94 1,208.60 19,864.09 1,193.20 19,971.13 1,188.10 20,093.78 1,189.50 20,100.91 1,197.30 20,068.51 1,210.30 19,912.71 1,215.00 19,799.85 1,204.30 19,827.25 1,200.90 19,732.40 1,211.30 19,804.72 1,212.00 19,826.77 1,195.30 19,885.73 1,198.90 19,891.00 1,195.60 19,954.28 1,184.20 19,855.53 1184.20 1,183.50 19,855.53 19,887.38 1,171.90 19,963.80 1,179.70 19,899.29 1,163.80 19,942.16 1,160.40 19,881.76