Question

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

Answer 1

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