What is linear regression? Its a statistically analysis of the relationship between two variables (dependent vs independent). For example, what is the relationship between Google stock and the Dow Jones Industrial average? Another question .... What is the relationship between a NFL quarterback's passing rating and win/loss of the game?
Multiple regression differs from linear regression because multiple regression determines the relationship among more than two variables ( dependent vs any independent). For example, predicting who wins the football games based on average yards rushing, quarterback rating and red zone effectiveness.
For more information about linear regression, see the video below. If you have not studied this, you will soon. When you see this again, use excel.
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The assignment is to compare the annual Dow Jones Industrial Ave vs the annual Stock Price of any company. Go to the following web site: http://www.1stock1.com/1stock1_112.htm
- Select the DJIA and pick a ten year range.
- Copy the output into excel.
- Keep the Year Column and either the Beginning Column or Ending Column, delete the rest
- Select a company (click link alphabet first .... example: B Stocks)
- Select same 10 year range you used for DJIA
- Copy the output into excel
- Keep either the Beginning Column or Ending Column (same as DJIA - Beg or End), delete the rest
- Save this spreadsheet before you start working with the data.
You need to reopen your excel file with the data you just pasted and then create a graph, followed by the "best fit line", regression formula. The videos below will walk you through the process.
Remember to upload your homework through the blog.
Wouldn't it be more meaningful to plot a Simple Moving Average or Exponential Moving Average line?
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