Your team is establishing a used car dealership and would like to develop a pricing model to help set sticker prices.

You have been given a set of car sales data for a large set of cars of the same make and model you intend to sell.

An investor group would like to invest $5 million, but they want to see that you have a solid tool to help you price cars appropriately.

1. You have decided to exclude Trim and Mode & type.Generate a correlation matrix for the remaining variables. Comment on the values and what concerns if any you might have with the variables. NOTE:Make should be set-up as an indicator variable.

Correlation model as below 

 

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Price Mileage Buick Cadillac Chevrolet Pontiac SAAB Saturn Cylinder Liter Doors Cruise Sound Leather Price 1 Mileage -0.14305 1 Buick -0.01777 0.024193 Cadillac 0.659297 -0.03747 -0.1105 1 Chevrolet -0.4046 -0.01751 -0.27029 -0.27029 Pontiac SAAB Saturn Cylinder Liter -0.1421 -0.02989 -0.1592 -0.1592 -0.38941 0.335404 0.056182 -0.13512 -0.13512 -0.33051 -0.19466 -0.2117 0.017467 -0.0944 -0.0944 -0.23091 0.569086 -0.02946 0.175317 0.534896 -0.15754 0.114436 -0.37188 -0.19155 0.558146 -0.01864 0.188093 0.406216 -0.12405 0.113863 -0.32675 -0.18094 0.957897 -0.13875 -0.01694 0.184913 0.087104 -0.14581 0.040943 -0.02568 -0.06485 0.002206 -0.07926 -0.136 -0.11543 Doors Cruise Sound Leather 0.430851 0.025037 0.190645 0.190645 -0.29319 0.000939 0.233118 -0.19904 0.354285 0.377509 -0.04767 -0.12435 -0.02615 -0.01182 -0.09193 0.259566 -0.07431 -0.08721 -0.13937 0.157197 0.001005 -0.21293 0.205301 0.155492 -0.08985 0.003809 -0.15279 -0.0897 -0.06553 -0.06253 -0.09173 0.07552 0.087332 -0.06197 -0.07057 0.165444 1 1 Price Mileage Buick Cadillac Chevrolet Pontiac SAAB Saturn Cylinder Liter Doors Cruise Sound Leather Price 1 Mileage -0.14305 1 Buick -0.01777 0.024193 Cadillac 0.659297 -0.03747 -0.1105 1 Chevrolet -0.4046 -0.01751 -0.27029 -0.27029 Pontiac SAAB Saturn Cylinder Liter -0.1421 -0.02989 -0.1592 -0.1592 -0.38941 0.335404 0.056182 -0.13512 -0.13512 -0.33051 -0.19466 -0.2117 0.017467 -0.0944 -0.0944 -0.23091 0.569086 -0.02946 0.175317 0.534896 -0.15754 0.114436 -0.37188 -0.19155 0.558146 -0.01864 0.188093 0.406216 -0.12405 0.113863 -0.32675 -0.18094 0.957897 -0.13875 -0.01694 0.184913 0.087104 -0.14581 0.040943 -0.02568 -0.06485 0.002206 -0.07926 -0.136 -0.11543 Doors Cruise Sound Leather 0.430851 0.025037 0.190645 0.190645 -0.29319 0.000939 0.233118 -0.19904 0.354285 0.377509 -0.04767 -0.12435 -0.02615 -0.01182 -0.09193 0.259566 -0.07431 -0.08721 -0.13937 0.157197 0.001005 -0.21293 0.205301 0.155492 -0.08985 0.003809 -0.15279 -0.0897 -0.06553 -0.06253 -0.09173 0.07552 0.087332 -0.06197 -0.07057 0.165444 1 1

Answer rating: 100% (QA)

The correlation matrix you provided shows the strength and direction of the linear relationship between pairs of variables in your used car sales data ... View the full answer