Underlying correlation and regression analysis

Assignment Help Finance Basics

Reference no: EM133325662

Case: You are working as junior analyst at Investment.Com and have been asked to undertake some analysis for the senior management team.

Gather historical data on price for a one-year period for an index and one stock of your choice (the equity should be traded on the index selected). This should be downloaded into Microsoft excel.

Carry out a preliminary analysis of the relationship between the stock price and the index using descriptive statistics.

Average price of index = 14366.58947

Average price of stock = 194.8259463
SD of index = 877.0389838
SD of stock = 58.37272886

Correlation = 0.728102076
Covariance = 0.000233851

Using correlation and regression analysis undertake a more detailed analysis of the relationship between the equity and the index.

Correlation = 0.728102076
Covariance = 0.000233851

Regression ----

y = 0.0623x - 699.62
R² = 0.8809

Provide a very in detailed account of the assumptions underlying correlation and regression analysis as well as their limitations in analysis for this task in a big brief and explain the given regression above by explaining the regression equation available.

Reference no: EM133325662

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