Test the correlation between AAII's Investment Sentiment Survey (see below) and the S&P500 index. You can pick the time period for the analysis, but you probably want at least 100 observations. You can go to Yahoo Finance and download historical data for some other index or mutual fund. if you don't want to use the S&P 500. It will give you closing prices and you should use the "adjusted close." Also, make sure you convert the index values to a % change. You also should use the change in the investor sentiment (or the % change) and not just the level of the sentiment index from AAII. SHOW IN EXCEL PLEASE.

• Executive summary. What did you test? How did you test it? What are your main conclusions?
• Correlation Test
  1. State the hypothesis
  2. Identify the appropriate test statistic
  3. Specify the significance level
  4. State the decision rule
  5. Collect the data - Time period studied, where you got your data, descriptive statistics (mean, standard deviation, range, etc.) in a table. Incorporate a scatterplot.
  6. Make the statistical decision
  7. Discuss the significance of your results
• Regression
  1. What is your hypothesis?
  2. Briefly discuss your model.
  3. Display the regression results in a table
  4. Discuss the regression results (interpretation of coefficient estimate, r², etc.)
  5. Check the residuals
     1. Scatterplot of error term and independent variable
     2. Does heteroskadesticity and/or serial correlation seem to be a problem?
  6. What is your main conclusion?
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