This task will involve the analysis of the Smarket data in ISLR library in R.
The task will involve the use of EDA to establish patterns between Independent and response variable.
In the EDA ,boxplots,scatter plots and variance- covariance matrix will be some of the tools used .
For inference purpopes a GLM of family logit will be fit to predict the direction of the stock based on previous returns at Lags 1 – 5,volume and Year the trade took place.
Boxplots were used to investigate the distribution of returns for Lag1,2,3,4,5 against the direction of stocks as well as
Scatter plots were also used to investigate bivariate relationship between past stock returns and volume against direction of the stock.
Variance-covariance matrix was used to check for possible auto correlations between returns this would help in determining of effective statistical methods that could address multicollinearity incase detected