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

46.5 45.41

47.93 15.8

51.78 49.58

52.17 44.34

46.96 18.0

Solution :

 X Y XY X^2 Y^2 45.96 38.76 1781.41 2112.322 1502.3376 46.5 45.41 2111.565 2162.25 2062.0681 47.93 15.8 757.294 2297.285 249.64 51.78 49.58 2567.252 2681.168 2458.1764 52.17 44.34 2313.218 2721.709 1966.0356 46.96 18 845.28 2205.242 324
 n 6 sum(XY) 10376.02 sum(X) 291.30 sum(Y) 211.89 sum(X^2) 14179.98 sum(Y^2) 8562.26 Numerator 532.56 Denominator 1204.87 r 0.4420 r square 0.1954 Xbar(mean) 48.5500 Ybar(mean) 35.3150 SD(X) 2.4953 SD(Y) 13.4124 b 2.3758 a -80.0281

coefficient of correlation = r = 0.4

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