Reference no: EM13580530

The closing stock price for each of two stocks was recorded over a 12-month period. The closing price for the Dow Jones Industrial Average (DJIA) was also recorded over this same time period. These values are shown in the following table:

MONTH	DMA	STOCK 1	STOCK 2
1	11,168	483	32.4
2	11,150	48.2	31.7
3	11.186	44.5	31.9
4	11,381	44.7	36.6
5	11,679	49.3	36.7
6	12,081	49.3	38.7
7	12,222	46.1	39.5
8	12,463	46.2	41.2
9	12,622	47.7	43.3
10	12,269	48.3	39.4
II	12,354	47.0	40.1
12	13,063	47.9	42.1
13	13,326	47.8	45.2

(a) Develop a regression model to predict the price of stock 1 based on the Dow Jones Industrial Average.

(b) Develop a regression model to predict the price of stock 2 based on the Dow Jones Industrial Average.

(c) Which of the two stocks is most highly correlated to the Dow Jones Industrial Average over this timeperiod?