Using any data analysis tool of your choice, examine the case-study and answer the questions below:

The Dow Jones Industrial Average (DJIA) and the Standard & Poor (S&P) 500 Index are both used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the S&P 500 for 10 weeks, beginning with February 11,2000 are shown (Barron’s April 17, 2000)

Date

S&P 500

1387

1346

1333

1409

1395

1464

1527

1499

1516

1357

the independent variable

11-Feb 10425 18-Feb 10220 25-Feb 9862 31-Mar 10367 10-Mar 9929 17-Mar 10595 24-Mar 11113 31-Mar 10922 7-Apr 11111 14-Apr 10306

Note: Consider DJIA as

Dow Jones

1. Develop a scatter diagram for these data and interpret the same. 2. Compute the sample correlation coefficient for these data.
3. Are they poorly correlated, or do they have a close association? 4. Develop the least squares estimated regression equation

5. Compute the coefficient of Determination? Would you recommend the regression model for the purpose of estimation?