The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 Index (S&P 500) are both

Question:

The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 Index (S&P 500) are both used to measure the performance of the stock market. The DJIA is based on the price of stocks for 30 large companies; the S&P 500 is based on the price of stocks for 500 companies. If both the DJIA and S&P 500 measure the performance of the stock market, how are they correlated? The following data show the daily percent increase or daily percent decrease in the DJIA and S&P 500 for a sample of nine days over a three-month period (The Wall Street Journal, January 15 to March 10, 2006).

a. Show a scatter diagram.
b. Compute the sample correlation coefficient for these data.
c. Discuss the association between the DJIA and S&P 500. Do you need to check both before having a general idea about the daily stock market performance?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...