Problems

The data for the following problems is in file Ch46data.xlsx.

1. The Problem 1 worksheet contains the number of cars parked each day both in the outdoor lot and in the parking garage near the Indiana University Kelley School of Business. Find and interpret the correlation between the number of cars parked in the outdoor lot and in the parking garage.

2. The Problem 2 worksheet contains daily sales volume (in dollars) of laser printers, printer cartridges, and school supplies. Find and interpret the correlations between these quantities.

3. The Problem 3 worksheet contains annual returns on stocks, T-Bills, and T-Bonds. Find and interpret the correlations between the annual returns on these three classes of investments.

   Here are a few more problems:

4. The file Dow.xlsx contains the monthly returns between the 30 stocks comprising the Dow Jones Index. Find the correlations between all stocks. Then, for each stock, use conditional formatting to highlight the three stocks most correlated with that stock. (Of course, you should not highlight a stock as correlated with itself.)

5. NFL teams play 16 games during the regular season. Suppose the standard deviation of the number of games won by all teams is 2, and the correlation between the number of games a team wins in two consecutive seasons is 0.5. If a team goes 12 and 4 during a season, what is your best prediction for how many games they will win next season?