The closing stock price for each of two stocks was recorded over a 12-month period. The closing price for the Dow Jones Industrial Average (DJIA) was also recorded over this same time period. These values are shown in the following table:
|
MONTH
|
DMA
|
STOCK 1
|
STOCK 2
|
|
1
|
11,168
|
483
|
32.4
|
|
2
|
11,150
|
48.2
|
31.7
|
|
3
|
11.186
|
44.5
|
31.9
|
|
4
|
11,381
|
44.7
|
36.6
|
|
5
|
11,679
|
49.3
|
36.7
|
|
6
|
12,081
|
49.3
|
38.7
|
|
7
|
12,222
|
46.1
|
39.5
|
|
8
|
12,463
|
46.2
|
41.2
|
|
9
|
12,622
|
47.7
|
43.3
|
|
10
|
12,269
|
48.3
|
39.4
|
|
II
|
12,354
|
47.0
|
40.1
|
|
12
|
13,063
|
47.9
|
42.1
|
|
13
|
13,326
|
47.8
|
45.2
|
(a) Develop a regression model to predict the price of stock 1 based on the Dow Jones Industrial Average.
(b) Develop a regression model to predict the price of stock 2 based on the Dow Jones Industrial Average.
(c) Which of the two stocks is most highly correlated to the Dow Jones Industrial Average over this timeperiod?