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Final Project: Regression
Model and Hypothesis Test of Dow Jones Industrial Average (DJIA)
IET
603: Quality Assurance in Science and Technology present to:
Dr.
Ahmad Zargari
Omchand
Mahdu
The financial markets have manifested itself into a global marketplace where dreams are made and fortunes are lost. For investors, it facilitates the trading of stocks, which are considered investment vehicles. For companies, it allows for the raising capital and additional financing. With the growing importance of the stock market in our society, investors follow stock indexes religiously and it has become part of our everyday vocabulary. This paper focuses on the Dow Jones Industrial Average (DJIA), the most frequently quoted stock index. The scope of this paper is to highlight the intricacies behind the Dow Jones Industrial Average (DJIA). We will provide a synopsis of this stock index and the components that have the strongest influence on its movement. In addition, a regression model will be derived for DJIA taking into account the pricing impact of the 30-stock components that is used to derive the index. Finally, we proceeded to test the null hypothesis of ten (10) stocks that have the greatest positive and negative impact on the computation of this index. This will be supplemented by a series of histograms with normal curve that shows the distribution of these stocks over their trading life.
Dow
Jones Industrial Average (DJIA)
Dow Jones &
Company was founded in 1882 by three young reporters by the name of Charles
Dow, Edward Jones and Charles Bergstresser. In their basement office near the
New York Stock Exchange, they produced handwritten newsletters called
"flimsies" that were delivered by messenger to subscribers in the
Wall Street area. The Dow Jones Industrial Average, comprised of 12 ‘smokestack’
companies, made its debut
At first, the average was
published irregularly, but daily publication in The Wall Street Journal
began on
Dow Jones Industrial Average: http://www.dowjones.com/index_aboutdow.htm
Today, the circle of investors has widened far beyond the Wall Street cliques of the past century to millions of everyday working men and women. These people are turning to stocks to help them amass capital for their children's college tuition bills and their own retirements. Therefore, the rationale of this study is to test whether movements in the Dow Jones Industrial Average is a direct result of the stocks that are used to compute this indicator. We are interested in deciphering whether or not all 30 stocks have a positive effect on this index and whether investors can believe in this stock movement indicator. Further, it is our aim to test the null hypothesis of the most significant positive and negative indicators so that investors can make better investment decisions in the future.
The Dow Jones Industrial Average is a price-weighted average of 30
significant stocks traded on the New York Stock Exchange and the Nasdaq. The 30 currently used stocks for computing the DJIA
include 3M Company, Exxon Mobil Corporation,
McDonald’s Corporation, Alcoa Incorporated, General Electric Company, Merck
& Company, Incorporated, Altria Group, Incorporated General Motors Corporation,
Microsoft Corporation, American Express Company, Hewlett-Packard Company,
Pfizer Incorporated, American International Group Inc., Home Depot
Incorporated, Procter & Gamble Company, Boeing Company, Honeywell
International Inc., SBC Communications Incorporated, Caterpillar Incorporated,
Intel Corporation, United Technologies Corporation, Citigroup Incorporated,
International Business Machines (IBM), Verizon Communications Inc., Coca-Cola
Company, J.P. Morgan Chase & Company, Wal-Mart Stores Incorporated, DuPont,
Johnson & Johnson and the Walt Disney Company.
These 30 stocks come from diverse industries such as Metal Mining, Insurance (Prop. & Casualty), Consumer Financial Services, Aerospace & Defense, Money Center Banks, Construction & Agricultural Machinery, Chemicals: Plastics & Rubber, Broadcasting & Cable TV, Conglomerates, Auto & Truck Manufacturers, Retail (Home Improvement), Aerospace & Defense, Computer Peripherals, Computer Hardware, Semiconductors, Major Drugs, Beverages (Non-Alcoholic), Restaurants, Tobacco, Major Drugs, Software & Programming, Personal & Household Products, Communications Services, Retail (Department & Discount) and Oil & Gas. Thus, the notion behind the DJIA is an attempt to ensure that all industrial sectors of the market are covered so that a comprehensive model can be design.
Such
large, frequently traded stocks provide an important feature of the Industrial Average: timeliness. At any
moment during the trading day, the Dow Jones Industrial Average is based on
very recent transactions. The Dow Jones Industrial Average is the most-quoted
market indicator in newspapers, on TV and on the Internet. Because of its
longevity, it became the first to be quoted by other publications. This
practice became habit when Wall Street earned at least a mention in the general
news each day, and habit became tradition when the post-World War II bull
market galvanized the nation's attention. The Industrial Average became the
indicator to cite if you were citing only one. Besides longevity, two other
factors play a role in its widespread popularity: It is understandable to most
people, and it reliably indicates the market's basic trend. Retrieved
from: http://www.dowjones.com/index_aboutdow.htm
The paragraphs that follow provide a brief description of ten (10) of the most influential company’s whose stocks are used to compute the DJIA.
General Motors Corporation (GM)
General
Motors Corporation (GM) participates in the automotive industry through the
activities of General Motors Automotive, which consists of four regions: GM
North America (GMNA), GM Europe (GME), GM Latin
The Home Depot, Inc.
The
Home Depot, Inc. operates Home Depot stores, which are warehouse-style stores
selling building materials, home improvement supplies and lawn and garden
products, primarily to do-it-yourselfers. In addition, the Company operates
J.P. Morgan Chase & Co. is a global financial services firm with operations in more than 50 countries. The Company's wholesale businesses are comprised of four segments: Investment Bank (IB), Treasury & Securities Services (TSS), Investment Management & Private Banking (IMPB) and JPMorgan Partners (JPMP). IB provides investment banking and commercial banking products and services. The three businesses within TSS provide debt servicing, securities custody and related functions, and treasury and cash management services to corporations, financial institutions and governments. The IMPB business provides investment management services to institutional investors, high net worth individuals and retail customers. JPMP is the Company's private equity business. The Company's national consumer and middle market businesses, which provide lending and full-service banking to consumers and small and middle market businesses, collectively comprise Chase Financial Services. http://finance.yahoo.com/q/pr?s=JPM
Merck
& Co., Inc.
Merck & Co., Inc. is a global research-driven pharmaceutical products company that discovers, develops, manufactures and markets a range of products to improve human and animal health, directly and through its joint ventures. The Company's products include therapeutic and preventive agents, generally sold by prescription, for the treatment of human disorders and animal health supplies. During 2003, products that contributed to the year's sales growth were Singulair for asthma and seasonal allergic rhinitis, Fosamax for osteoporosis, Cozaar/Hyzaar for high blood pressure, Vioxx and Arcoxia for arthritis and pain, Cancidas for infections, Cosopt for glaucoma, Proscar for benign prostate enlargement, and Maxalt for migraines. Merck & Co. sells its products primarily to drug wholesalers and retailers, hospitals, clinics, government agencies and managed healthcare providers such as health maintenance organizations and other institutions. http://finance.yahoo.com/q/pr?s=MRK
Wal-Mart Stores, Inc.
Wal-Mart
Stores, Inc. operates retail stores in various retailing formats in all 50
states in the
The Walt Disney Company is a diversified worldwide
entertainment company with operations in four business segments: Media
Networks, Parks and Resorts, Studio Entertainment and Consumer Products. The
Media Networks segment consists of the Company's television and radio networks,
cable/satellite and international broadcast operations, production and
distribution of television programming, and Internet operations. Through the
Parks and Resorts segment, Walt Disney owns and operates four destination
resorts in the
E. I. DuPont de Nemours and Company (DuPont) is a global company engaged in science and technology. The agriculture and nutrition segment offers hybrid seed corn and soybean seed, herbicides, fungicides, insecticides, grains and soy protein. The coatings and color technologies segment markets automotive finishes and white pigment and mineral products. The electronic and communication technologies segment offers fluorochemicals, fluoropolymers, photopolymers and electronic materials. The performance materials segment markets engineering polymers, packaging and industrial polymers, films and elastomers. The pharmaceuticals segment includes an interest in the collaboration relating to Cozaar/Hyzaar anti-hypertensive drugs. The safety and protection segment offers specialty and industrial chemicals, nonwovens, aramids and solid surfaces. The textiles and interiors segment, which was sold in April 2004, sold flooring systems, industrial fibers, elastane, textiles and intermediates. http://finance.yahoo.com/q/pr?s=DD
McDonald's Corporation, with its subsidiaries, primarily
operates and franchises McDonald's restaurants in the food service industry.
These restaurants serve a varied, yet limited, value-priced menu in more than
100 countries around the world. Its menu includes hamburgers and cheeseburgers,
Big Mac, Quarter Pounder with Cheese, Big N' Tasty, Filet-O-Fish, several
chicken sandwiches, Chicken McNuggets, French fries, Premium Salads, milk
shakes, McFlurry desserts, sundaes and soft serve cones, pies, cookies and soft
drinks and other beverages. In addition, the restaurants sell a variety of other
products during limited-time promotions. The Company also operates Boston
Market and Chipotle Mexican Grill in the
Pfizer Inc. is a research-based, global pharmaceutical company. The Company discovers, develops, manufactures and markets prescription medicines for humans and animals, as well as many consumer products. The Company operates in two business segments: Pharmaceuticals and Consumer Products. The Pharmaceuticals segment includes prescription pharmaceuticals for treating cardiovascular diseases, infectious diseases, central nervous system disorders, diabetes, urogenital conditions, allergies, arthritis and other disorders; products for livestock and companion animals, and the manufacture of empty soft-gelatin capsules. The Consumer Products segment includes self-medications for oral care, upper respiratory health, eye care, skin care, gastrointestinal health and other products. In April 2003, the Company merged with Pharmacia Corporation. The combined operations of the companies enlarges Pfizer's portfolio of consumer healthcare brands and expands its animal health business. http://finance.yahoo.com/q/pr?s=PFE
Verizon Communications
Inc.
Verizon Communications Inc. is a provider of
communications services with four operating segments: Domestic Telecom,
Domestic Wireless, Information Services and International. Domestic Telecom
services principally represent Verizon's telephone operations that provide
local telephone services in 29 states and the
In order to derive a regression model for Dow Jones Industrial Average (DJIA) we used a sample of the closing prices for each of the 30 component stocks used in computing the index. As such, closing monthly values from May 1994 to April 2004, which amounts to 120 months were used to generate the regression equation in Minitab as reflected in the equation below.
DOW JONES
INDUSTIAL AVERAGE = 1971
- 7.5 (Coca Cola) + 31.8 (GM) + 2.23 (Exxon)
- 19.3 (Alcoa) + 21.6 (AIG) + 10.4 (CAT)
+ 16.9 (IBM) + 6.5 (SBC) + 4.65 (3M)
+ 4.2 (HON) + 20.6 (BA) + 3.8 (CITI)
- 25.4 (DUPONT) - 22.2 (DISNEY) - 4.46 (GE)
+ 31.3 (HOME DEPOT) + 4.27 (HP) - 14.3 (INTEL)
+ 1.37 (JNJ) + 33.3 (JPM) - 31.0 (McDonalds)
- 10.1 (ALTRIA) + 24.9 (MERCK) - 9.06 (MSFT)
- 23.3 (PFIZER) + 11.8 (PG) - 7.06 (UTX)
- 24.1 (VIRIZON) + 46.5 (WALMART).
R-Sq = 95.5%; R-Sq(adj)
= 94.0%
The regression equation above reflects on the impact of all 30 diversified stocks and the degree of influence they have on the DJIA trading value. Based on the Minitab generation, an R-Square value of 95.5 percent was obtained. This tells us that 95.5 percent of DJIA can be explained by the movements in the prices of these 30 diversified stocks. Hence, the dependent variable (DJIA) is strongly influenced by these stocks. Looking at the equation closer, a trading value of 1,971 points would be the least value of the DJIA index. That is, if the price of the component stocks were zeros the market would trade at a level of 1,971 points.
Based on our model,
all of the following companies have a positive impact on the Dow Jones
Industrial Average. These include, General Motors Corporation, Exxon Mobil
Corporation, American International Group Inc., Caterpillar Incorporated,
International Business Machines (IBM), SBC Communications Incorporated, 3M
Company, Honeywell International Inc., Boeing Company, Wal-Mart Stores
Incorporated, Home Depot Incorporated, Hewlett-Packard Company, Citigroup
Incorporated, Johnson & Johnson, Procter & Gamble Company, Boeing
Company and Merck & Company Incorporated.
As such, the
market index will rise by the respective coefficient of these companies’s stock
if their stock price increases by a dollar. For instance, with a coefficient of
46.5 points, Wal-mart has the highest positive impact on the index since for
every dollar increase in the company’s stock, the
market will rise by 46.5 points. Further, Johnson and Johnson has the lowest
positive impact on the market trading value since the market will only increase
by 1.37 points if this company’s stock price increase by a single dollar. It
must be noted also, that for every dollar decrease in stock price, the market
will decline by a similar coefficient for these stocks.
On the other
hand, the following company’s stock has a negative impact on the DJIA:
McDonald’s
Corporation, Alcoa Incorporated, General Electric Company, Altria Group
Incorporated, Microsoft Corporation, American Express Company, Pfizer
Incorporated, American International Group Inc., Honeywell International Inc.,
SBC Communications Incorporated, Intel Corporation, United Technologies
Corporation, International Business Machines (IBM), Verizon Communications
Inc., Coca-Cola Company, J.P. Morgan Chase & Company, DuPont, and the Walt
Disney Company.
Thus, a price
increase in these companies’s stock will result in a decrease in the trading
level of the market while a decrease in the price would result in an increase
in the market trading level. According to our regression model, McDonalds has
the greatest negative impact on the market index. That is, for every dollar
increase in the company’s stock, the market will decline by 31 points and visa
verse. In addition, General Electric has the weakest negative blow to the index
with the market losing 4.46 points if the price of this company’s stock
increases.
Based on the results generated from the regression analysis we chose ten stocks (5 Positive and 5 Negative) that impact on DJIA and tested each individual stock null hypothesis based on the population mean and standard deviation and a sample of 100 randomly selected monthly closing stock prices. The five positive independent variables chosen include Wal-mart, JP Morgan Chase, General Motors, Home Depot and Merck while the negative independent variable include Dupont, Disney, McDonalds, Pfizer and Verizon.
Positive Independent Stocks
Variable N Mean Median TrMean StDev SE Mean
Wal-Mart 381 37.419 35.630 36.940
15.521 0.795
JP Morgan 245
46.81 38.89
44.59 24.62 1.57
GM 508 62.499
62.625 62.079 17.075
0.758
Home Depot 237
41.66 42.00
41.57 15.86 1.03
Merck 412
60.70 53.87
58.36 27.28 1.34
Variable Minimum Maximum Q1 Q3
Wal-mart 9.500 92.190
24.810 49.500
JP Morgan 10.13 138.56
32.32 52.88
GM 28.870 112.370
48.607 74.968
Home Depot 11.00 83.06
31.00 53.04
Merck 26.08 155.90
41.15 71.26
The following table shows the Descriptive Statistics of the top five stocks based on a random sample of 100 monthly closing stock price since they began to publicly trade their stock.
Variable N Mean Median TrMean StDev SE Mean
RS Wal-mart 100 38.68
38.31 38.05 16.66 1.67
RS JP 100
45.54 38.50
42.69 24.74 2.47
RS GM 100 62.29 63.24 62.01 16.79 1.68
RS HD 100
43.32 45.19
43.31 15.86 1.59
RS Merck 100
56.72 47.81
53.65 27.48 2.75
Variable Minimum Maximum Q1 Q3
RS Walmart 10.00 92.19
25.50 52.29
RS JP Mo 10.13 138.56
31.75 49.65
RS GM 32.13 103.00
47.75 75.00
RS Home 12.50 83.06
34.18 54.00
RS Merck 26.86 154.02
39.74 63.26
Ho μ = $37.419
Ha μ ≠ $37.419
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 0.81245
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since –1.96<0.81245>1.96, the test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that Wal-mart’s mean stock price is not different from the sample mean of 100 at the 95 percent confidence interval.
Ho μ = $
46.81
Ha μ ≠ $ 46.81
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= -0.5158
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<-0.5158>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that JP Morgan’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
Ho μ = $
41.66
Ha μ ≠ $ 41.66
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 1.047
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<1.047>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that Home Depot’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
The graph above shows that Home Depot’s stock price is normally distributed and thus is symmetrical in its shape.
Ho μ = $
62.499
Ha μ ≠ $ 62.499
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= -0.1224
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<-0.1224>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that General Motor’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
Ho μ = $
60.70
Ha μ ≠ $ 60.70
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= -1.4589
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<-1.4589>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that Merck’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
Here, Merck Company stock price is positively skewed indicating that the stock price is not normally distributed about the mean.
In this section we proceed to test the null hypothesis that these negative independent variable are indeed not different from our random sample. Thus, as it the case above, Minitab was used to generate the descriptive statistics shown below for the historic stock prices of these companies and the 100 randomly selected price over their trading years.
Variable N Mean Median TrMean StDev SE Mean
Dupont 508
102.37 82.56
97.84 63.01 2.80
Disney 508
63.33 52.94
60.16 35.91 1.59
Pfizer 268
61.06 59.50
59.66 21.79 1.33
Verizon 246
62.14 59.94
61.33 17.76 1.13
McDonalds 427
42.660 42.180
42.120 13.904 0.673
Variable Minimum Maximum Q1 Q3
Dupont 30.25 275.50
47.66 144.81
Disney 15.14 236.75
39.50 79.22
Pfizer 29.02 138.75
42.95 71.94
Verizon 27.44
124.25 49.36
71.91
McDonalds 13.610 92.540
31.870 51.180
Variable N
Mean Median TrMean
StDev SE Mean
RS Dupon 100
110.78 95.62
106.48 66.63 6.66
RS Disne 100
66.40 53.37
63.79 36.29 3.63
RS Pfize 100
62.10 63.00
60.70 21.94 2.19
RS Viriz 100
63.01 61.35
62.08 16.40 1.64
RS McDon 100
43.88 42.24
43.21 15.45 1.55
Variable Minimum Maximum Q1 Q3
RS McDon 14.46 92.54
32.02 51.96
RS Disne 19.65 185.25
40.19 86.22
RS Dupon 34.50 275.50
51.19 151.00
RS Pfize 29.82 138.75
42.95 71.94
RS Viriz 35.32 124.25
51.80 69.88
Ho μ = $
102.37
Ha μ ≠ $ 102.37
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 1.335
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<1.335>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that DuPont Company’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
In addition, this company stock price reflects a platykurtic kurtosis and is skewed to the right. Hence, the historic stock price is not normally distributed.
Ho μ = $
63.33
Ha μ ≠ $ 63.33
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 0.855
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<0.855>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that the Walt Disney Company’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
The histogram with normal plot above shows that Walt Disney’s historic stock price is skewed to the right and as such it is not normally distributed from the mean.
Ho μ = $
61.06
Ha μ ≠ $ 61.06
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 0.473
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<0.473>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that the Pfizer’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
Pfizer’s historic stock price is positively skewed thereby indicating that it is not normally distributed about the mean.
Ho μ = $
62.14
Ha μ ≠ $ 62.14
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 0.489
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<0.489>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that the Verizon’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
This company’s historic stock price is positively skewed thereby indicating that it is not normally distributed about the mean.
McDonald’s
Corporation
Ho μ = $
42.66
Ha μ ≠ $ 42.66
We have chosen a level of significance of 5 percent or a confidence level of 95 percent.
Since a sample of 100 months of data was selected it would be appropriate to use the Z distribution as the Test Statistic.
Z = X - μ
s/√n
= 0.877
Reject Null Hypothesis if Z does not fall between –1.96 and +1.96. Otherwise, the Null hypothesis is not rejected.
Since the –1.96<0.877>1.96, test statistic falls within the critical Z value. Thus, we fail to reject the Null hypothesis and conclude that the McDonald’s mean stock price is not different from the sample of 100 at the 95 percent confidence interval.
From this normal curve and histogram we see that McDonald’s historic stock price is normally distributed resulting in the absence of any skewness.
In this paper, we generated a regression model that can be
used to predict the future level of the Dow Jones Industrial Average (DJIA).
Based of the regression equation derived, we found that some stocks have a
positive effect on the index while others produced a negative effect. Also, the
R-Square indicated that 95.5 percent of the movements in the DJIA could be
explained by the 30 independent stocks. It must be noted though that other
events outside of the components can explain shifts in the market. In recent
times, the terrorists’ attacks on
We tested the hypothesis of the 10 most influential stocks that is used to compute this stock index. The result was astonishing in that we failed to reject the null hypothesis on every occasion. This points out that the historical average is indeed accurately quoted. In addition, the histograms and normal curve produced by Minitab showed how the historical price of these stocks are distributed. In some cases, there was normality while in the others there was positive skewness. It was surprising however, in that there were no negative skewness observed. In closing, this project brought out great insights regarding the Dow Jones Industrial Average and the components that make up this index. The opportunity to apply the concepts and statistical techniques learnt in this class has allowed us to discern meaning from the data studied and we look forward to using this knowledge in the future.
Dow Jones Industrial Average – DJIA. Available at: http://www.investopedia.com/terms/d/djia.asp Date Retrieved: May 1, 2004.
Dow Jones Industrial
Average: Available at: http://www.dowjones.com/index_aboutdow.htm
Date Retrieved:
Dow Jones Industrial Average Components: Available at: http://finance.yahoo.com/q/cp?s=^DJI
Date Retrieved:
Wal-Mart Stores, Inc. Company Profile: Available at: http://finance.yahoo.com/q/pr?s=WMT
Date Retrieved:
Merck & Co., Inc. Company Profile: Available at: http://finance.yahoo.com/q/pr?s=MRK
Date Retrieved:
J.P. Morgan Chase & Co Company Profile: Available at: http://finance.yahoo.com/q/pr?s=JPM
Date Retrieved:
The Home Depot, Inc. Company Profile: Available at: http://finance.yahoo.com/q/pr?s=HD
Date Retrieved:
General Motors Corporation (GM) Company Profile: Available at: http://finance.yahoo.com/q/pr?s=GM
Date Retrieved:
Dupont Company Profile. Available at: http://finance.yahoo.com/q/pr?s=DD Date Retrieved: May 1, 2004.
Walt Disney Company Profile Available at: http://finance.yahoo.com/q?s=DIS Date Retrieved: May 1, 2004.
Verizon Communications Inc. Profile Available at: http://finance.yahoo.com/q/pr?s=VZ Date Retrieved: May 1, 2004.
Pfizer Incorporated Profile Available at: http://finance.yahoo.com/q/pr?s=PFE Date Retrieved: May 1, 2004.
McDonald’s Corporation Profile Available at: http://finance.yahoo.com/q/pr?s=MCD Date Retrieved: May 1, 2004.
© Omchand Mahdu
&