Problem Solving Methods and Analysis –  Data analysis

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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)

Note: Consider DJIA as the independent variable

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?