Question

# In an effort to determine whether any correlation exists between the price of stocks of airlines,...

In an effort to determine whether any correlation exists between the price of stocks of airlines, an analyst sampled six days of activity of the stock market spread out over 4 months. Using the following prices of Delta stock and Southwest stock, compute the coefficient of correlation. Stock prices have been rounded off to the nearest tenth for ease of computation.

 Delta Southwest 45.96 38.76 47.3 45.41 47.93 16.1 51.78 49.58 52.17 44.34 46.96 18.4

(Round the intermediate values to 2 decimal places. Round your answer to 3 decimal places.)

r =

Solution :

The correlation coefficient for the sample data will be as follows:

Where,

X : Delta

Y : Southwest

We have, n = 6

The correlation coefficient is 0.502.

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