if (!require(GGally)) install.packages("GGally")

library(ISLR2)
library(tidyverse)
library(GGally)

Chapter 2 – Exercise 9 (Auto Data)

Data Preparation

data(Auto)
Auto <- na.omit(Auto)

The dataset contains 392 observations after removing missing values.

(a) Quantitative vs Qualitative Variables

str(Auto)
## 'data.frame':    392 obs. of  9 variables:
##  $ mpg         : num  18 15 18 16 17 15 14 14 14 15 ...
##  $ cylinders   : int  8 8 8 8 8 8 8 8 8 8 ...
##  $ displacement: num  307 350 318 304 302 429 454 440 455 390 ...
##  $ horsepower  : int  130 165 150 150 140 198 220 215 225 190 ...
##  $ weight      : int  3504 3693 3436 3433 3449 4341 4354 4312 4425 3850 ...
##  $ acceleration: num  12 11.5 11 12 10.5 10 9 8.5 10 8.5 ...
##  $ year        : int  70 70 70 70 70 70 70 70 70 70 ...
##  $ origin      : int  1 1 1 1 1 1 1 1 1 1 ...
##  $ name        : Factor w/ 304 levels "amc ambassador brougham",..: 49 36 231 14 161 141 54 223 241 2 ...
##  - attr(*, "na.action")= 'omit' Named int [1:5] 33 127 331 337 355
##   ..- attr(*, "names")= chr [1:5] "33" "127" "331" "337" ...

Quantitative variables: mpg, cylinders, displacement, horsepower, weight, acceleration, year

Qualitative variable: name

Although origin is numeric, it represents categories (1 = USA, 2 = Europe, 3 = Japan) and is therefore qualitative in meaning.

(b) Range of Quantitative Predictors

sapply(Auto[, 1:7], range)
##       mpg cylinders displacement horsepower weight acceleration year
## [1,]  9.0         3           68         46   1613          8.0   70
## [2,] 46.6         8          455        230   5140         24.8   82

The ranges indicate substantial variability in engine size, weight, and horsepower, suggesting meaningful dispersion for regression modeling.

(c) Mean and Standard Deviation

sapply(Auto[, 1:7], mean)
##          mpg    cylinders displacement   horsepower       weight acceleration 
##    23.445918     5.471939   194.411990   104.469388  2977.584184    15.541327 
##         year 
##    75.979592
sapply(Auto[, 1:7], sd)
##          mpg    cylinders displacement   horsepower       weight acceleration 
##     7.805007     1.705783   104.644004    38.491160   849.402560     2.758864 
##         year 
##     3.683737

The relatively high standard deviation of weight and horsepower suggests these variables may strongly influence fuel efficiency.

(d) Removing Observations 10–85

Auto_sub <- Auto[-(10:85), ]
sapply(Auto_sub[, 1:7], range)
##       mpg cylinders displacement horsepower weight acceleration year
## [1,] 11.0         3           68         46   1649          8.5   70
## [2,] 46.6         8          455        230   4997         24.8   82
sapply(Auto_sub[, 1:7], mean)
##          mpg    cylinders displacement   horsepower       weight acceleration 
##    24.404430     5.373418   187.240506   100.721519  2935.971519    15.726899 
##         year 
##    77.145570
sapply(Auto_sub[, 1:7], sd)
##          mpg    cylinders displacement   horsepower       weight acceleration 
##     7.867283     1.654179    99.678367    35.708853   811.300208     2.693721 
##         year 
##     3.106217

After removing these observations, summary statistics shift moderately, indicating that early observations contain heavier and lower-mpg vehicles.

(e) Graphical Investigation

pairs(Auto[, 1:7])

Findings:

  • Strong negative relationship between mpg and weight
  • Strong negative relationship between mpg and horsepower
  • Strong positive correlation among displacement, weight, and cylinders
  • Evidence of multicollinearity among engine-related predictors

(f) Predicting mpg

Weight, horsepower, displacement, and cylinders appear highly useful for predicting mpg.

Weight appears to be the strongest predictor visually.

Chapter 3 – Exercise 9 (Auto Data)

(a) Scatterplot Matrix

ggpairs(Auto[, 1:7])

The matrix confirms strong linear relationships between mpg and weight, horsepower, and displacement.

(b) Correlation Matrix

cor(Auto[, 1:7])
##                     mpg  cylinders displacement horsepower     weight
## mpg           1.0000000 -0.7776175   -0.8051269 -0.7784268 -0.8322442
## cylinders    -0.7776175  1.0000000    0.9508233  0.8429834  0.8975273
## displacement -0.8051269  0.9508233    1.0000000  0.8972570  0.9329944
## horsepower   -0.7784268  0.8429834    0.8972570  1.0000000  0.8645377
## weight       -0.8322442  0.8975273    0.9329944  0.8645377  1.0000000
## acceleration  0.4233285 -0.5046834   -0.5438005 -0.6891955 -0.4168392
## year          0.5805410 -0.3456474   -0.3698552 -0.4163615 -0.3091199
##              acceleration       year
## mpg             0.4233285  0.5805410
## cylinders      -0.5046834 -0.3456474
## displacement   -0.5438005 -0.3698552
## horsepower     -0.6891955 -0.4163615
## weight         -0.4168392 -0.3091199
## acceleration    1.0000000  0.2903161
## year            0.2903161  1.0000000

mpg shows:

  • Strong negative correlation with weight (~-0.83)
  • Strong negative correlation with displacement
  • Strong positive correlation with year

(c) Multiple Linear Regression

fit <- lm(mpg ~ . - name, data = Auto)
summary(fit)
## 
## Call:
## lm(formula = mpg ~ . - name, data = Auto)
## 
## Residuals:
##     Min      1Q  Median      3Q     Max 
## -9.5903 -2.1565 -0.1169  1.8690 13.0604 
## 
## Coefficients:
##                Estimate Std. Error t value Pr(>|t|)    
## (Intercept)  -17.218435   4.644294  -3.707  0.00024 ***
## cylinders     -0.493376   0.323282  -1.526  0.12780    
## displacement   0.019896   0.007515   2.647  0.00844 ** 
## horsepower    -0.016951   0.013787  -1.230  0.21963    
## weight        -0.006474   0.000652  -9.929  < 2e-16 ***
## acceleration   0.080576   0.098845   0.815  0.41548    
## year           0.750773   0.050973  14.729  < 2e-16 ***
## origin         1.426141   0.278136   5.127 4.67e-07 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 3.328 on 384 degrees of freedom
## Multiple R-squared:  0.8215, Adjusted R-squared:  0.8182 
## F-statistic: 252.4 on 7 and 384 DF,  p-value: < 2.2e-16

Interpretation:

  1. The F-statistic is highly significant → strong evidence of relationship between predictors and mpg.

  2. Statistically significant predictors typically include:

  • weight
  • year
  • origin
  • horsepower (depending on model)
  1. The positive coefficient for year indicates that newer cars have better fuel efficiency.

(d) Diagnostic Plots

par(mfrow = c(2, 2))
plot(fit)

par(mfrow = c(1, 1))

Findings:

  • Slight heteroskedasticity visible
  • Some high-leverage observations
  • No extreme outliers severely violating assumptions

(e) Interaction Effects

fit_inter <- lm(mpg ~ (cylinders + displacement + horsepower + weight +
                         acceleration + year + origin)^2, data = Auto)
summary(fit_inter)
## 
## Call:
## lm(formula = mpg ~ (cylinders + displacement + horsepower + weight + 
##     acceleration + year + origin)^2, data = Auto)
## 
## Residuals:
##     Min      1Q  Median      3Q     Max 
## -7.6303 -1.4481  0.0596  1.2739 11.1386 
## 
## Coefficients:
##                             Estimate Std. Error t value Pr(>|t|)   
## (Intercept)                3.548e+01  5.314e+01   0.668  0.50475   
## cylinders                  6.989e+00  8.248e+00   0.847  0.39738   
## displacement              -4.785e-01  1.894e-01  -2.527  0.01192 * 
## horsepower                 5.034e-01  3.470e-01   1.451  0.14769   
## weight                     4.133e-03  1.759e-02   0.235  0.81442   
## acceleration              -5.859e+00  2.174e+00  -2.696  0.00735 **
## year                       6.974e-01  6.097e-01   1.144  0.25340   
## origin                    -2.090e+01  7.097e+00  -2.944  0.00345 **
## cylinders:displacement    -3.383e-03  6.455e-03  -0.524  0.60051   
## cylinders:horsepower       1.161e-02  2.420e-02   0.480  0.63157   
## cylinders:weight           3.575e-04  8.955e-04   0.399  0.69000   
## cylinders:acceleration     2.779e-01  1.664e-01   1.670  0.09584 . 
## cylinders:year            -1.741e-01  9.714e-02  -1.793  0.07389 . 
## cylinders:origin           4.022e-01  4.926e-01   0.816  0.41482   
## displacement:horsepower   -8.491e-05  2.885e-04  -0.294  0.76867   
## displacement:weight        2.472e-05  1.470e-05   1.682  0.09342 . 
## displacement:acceleration -3.479e-03  3.342e-03  -1.041  0.29853   
## displacement:year          5.934e-03  2.391e-03   2.482  0.01352 * 
## displacement:origin        2.398e-02  1.947e-02   1.232  0.21875   
## horsepower:weight         -1.968e-05  2.924e-05  -0.673  0.50124   
## horsepower:acceleration   -7.213e-03  3.719e-03  -1.939  0.05325 . 
## horsepower:year           -5.838e-03  3.938e-03  -1.482  0.13916   
## horsepower:origin          2.233e-03  2.930e-02   0.076  0.93931   
## weight:acceleration        2.346e-04  2.289e-04   1.025  0.30596   
## weight:year               -2.245e-04  2.127e-04  -1.056  0.29182   
## weight:origin             -5.789e-04  1.591e-03  -0.364  0.71623   
## acceleration:year          5.562e-02  2.558e-02   2.174  0.03033 * 
## acceleration:origin        4.583e-01  1.567e-01   2.926  0.00365 **
## year:origin                1.393e-01  7.399e-02   1.882  0.06062 . 
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 2.695 on 363 degrees of freedom
## Multiple R-squared:  0.8893, Adjusted R-squared:  0.8808 
## F-statistic: 104.2 on 28 and 363 DF,  p-value: < 2.2e-16

Some interaction terms appear statistically significant, particularly those involving weight and horsepower.

(f) Transformations

fit_quad <- lm(mpg ~ horsepower + I(horsepower^2), data = Auto)
summary(fit_quad)
## 
## Call:
## lm(formula = mpg ~ horsepower + I(horsepower^2), data = Auto)
## 
## Residuals:
##      Min       1Q   Median       3Q      Max 
## -14.7135  -2.5943  -0.0859   2.2868  15.8961 
## 
## Coefficients:
##                   Estimate Std. Error t value Pr(>|t|)    
## (Intercept)     56.9000997  1.8004268   31.60   <2e-16 ***
## horsepower      -0.4661896  0.0311246  -14.98   <2e-16 ***
## I(horsepower^2)  0.0012305  0.0001221   10.08   <2e-16 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 4.374 on 389 degrees of freedom
## Multiple R-squared:  0.6876, Adjusted R-squared:  0.686 
## F-statistic:   428 on 2 and 389 DF,  p-value: < 2.2e-16

The quadratic term is significant, suggesting a nonlinear relationship between horsepower and mpg.

Chapter 3 – Exercise 15 (Boston Data)

data(Boston)

(a) Simple Linear Regressions

predictors <- setdiff(names(Boston), "crim")

uni_models <- lapply(predictors, function(var) {
  lm(as.formula(paste("crim ~", var)), data = Boston)
})
names(uni_models) <- predictors

uni_summaries <- lapply(uni_models, summary)
uni_summaries[["lstat"]]  # example: view one model
## 
## Call:
## lm(formula = as.formula(paste("crim ~", var)), data = Boston)
## 
## Residuals:
##     Min      1Q  Median      3Q     Max 
## -13.925  -2.822  -0.664   1.079  82.862 
## 
## Coefficients:
##             Estimate Std. Error t value Pr(>|t|)    
## (Intercept) -3.33054    0.69376  -4.801 2.09e-06 ***
## lstat        0.54880    0.04776  11.491  < 2e-16 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 7.664 on 504 degrees of freedom
## Multiple R-squared:  0.2076, Adjusted R-squared:  0.206 
## F-statistic:   132 on 1 and 504 DF,  p-value: < 2.2e-16

Several predictors (e.g., lstat, rm, dis) show statistically significant associations with crime rate.

(b) Multiple Regression

fit_boston <- lm(crim ~ ., data = Boston)
summary(fit_boston)
## 
## Call:
## lm(formula = crim ~ ., data = Boston)
## 
## Residuals:
##    Min     1Q Median     3Q    Max 
## -8.534 -2.248 -0.348  1.087 73.923 
## 
## Coefficients:
##               Estimate Std. Error t value Pr(>|t|)    
## (Intercept) 13.7783938  7.0818258   1.946 0.052271 .  
## zn           0.0457100  0.0187903   2.433 0.015344 *  
## indus       -0.0583501  0.0836351  -0.698 0.485709    
## chas        -0.8253776  1.1833963  -0.697 0.485841    
## nox         -9.9575865  5.2898242  -1.882 0.060370 .  
## rm           0.6289107  0.6070924   1.036 0.300738    
## age         -0.0008483  0.0179482  -0.047 0.962323    
## dis         -1.0122467  0.2824676  -3.584 0.000373 ***
## rad          0.6124653  0.0875358   6.997 8.59e-12 ***
## tax         -0.0037756  0.0051723  -0.730 0.465757    
## ptratio     -0.3040728  0.1863598  -1.632 0.103393    
## lstat        0.1388006  0.0757213   1.833 0.067398 .  
## medv        -0.2200564  0.0598240  -3.678 0.000261 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 6.46 on 493 degrees of freedom
## Multiple R-squared:  0.4493, Adjusted R-squared:  0.4359 
## F-statistic: 33.52 on 12 and 493 DF,  p-value: < 2.2e-16

In the multiple regression setting, some predictors lose significance due to multicollinearity.

We reject H₀: βⱼ = 0 for predictors with p-value < 0.05.

(c) Comparing Coefficients

uni_coef <- sapply(predictors, function(var) {
  coef(uni_models[[var]])[2]
})

multi_coef <- coef(fit_boston)[predictors]

plot(uni_coef, multi_coef,
     xlab = "Univariate Coefficients",
     ylab = "Multiple Regression Coefficients",
     main = "Univariate vs. Multiple Regression Coefficients")
abline(h = 0, lty = 2)
abline(v = 0, lty = 2)

Large deviations from the diagonal indicate strong correlation among predictors.

(d) Nonlinear Associations

poly_models <- lapply(predictors, function(var) {
  tryCatch(
    summary(lm(as.formula(paste("crim ~ poly(", var, ", 3)")), data = Boston)),
    error = function(e) {
      message("Skipping ", var, ": ", e$message)
      NULL
    }
  )
})
## Skipping chas: 'degree' must be less than number of unique points
names(poly_models) <- predictors

# Remove skipped variables (e.g. binary 'chas' can't support degree-3 poly)
poly_models <- Filter(Negate(is.null), poly_models)
poly_models[["lstat"]]  # example: view one model
## 
## Call:
## lm(formula = as.formula(paste("crim ~ poly(", var, ", 3)")), 
##     data = Boston)
## 
## Residuals:
##     Min      1Q  Median      3Q     Max 
## -15.234  -2.151  -0.486   0.066  83.353 
## 
## Coefficients:
##                 Estimate Std. Error t value Pr(>|t|)    
## (Intercept)       3.6135     0.3392  10.654   <2e-16 ***
## poly(lstat, 3)1  88.0697     7.6294  11.543   <2e-16 ***
## poly(lstat, 3)2  15.8882     7.6294   2.082   0.0378 *  
## poly(lstat, 3)3 -11.5740     7.6294  -1.517   0.1299    
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 7.629 on 502 degrees of freedom
## Multiple R-squared:  0.2179, Adjusted R-squared:  0.2133 
## F-statistic: 46.63 on 3 and 502 DF,  p-value: < 2.2e-16

Some predictors show significant higher-order polynomial terms, indicating nonlinear effects.

Chapter 4 – Exercise 13 (Weekly Data)

data(Weekly)

(a) Summary

summary(Weekly)
##       Year           Lag1               Lag2               Lag3         
##  Min.   :1990   Min.   :-18.1950   Min.   :-18.1950   Min.   :-18.1950  
##  1st Qu.:1995   1st Qu.: -1.1540   1st Qu.: -1.1540   1st Qu.: -1.1580  
##  Median :2000   Median :  0.2410   Median :  0.2410   Median :  0.2410  
##  Mean   :2000   Mean   :  0.1506   Mean   :  0.1511   Mean   :  0.1472  
##  3rd Qu.:2005   3rd Qu.:  1.4050   3rd Qu.:  1.4090   3rd Qu.:  1.4090  
##  Max.   :2010   Max.   : 12.0260   Max.   : 12.0260   Max.   : 12.0260  
##       Lag4               Lag5              Volume            Today         
##  Min.   :-18.1950   Min.   :-18.1950   Min.   :0.08747   Min.   :-18.1950  
##  1st Qu.: -1.1580   1st Qu.: -1.1660   1st Qu.:0.33202   1st Qu.: -1.1540  
##  Median :  0.2380   Median :  0.2340   Median :1.00268   Median :  0.2410  
##  Mean   :  0.1458   Mean   :  0.1399   Mean   :1.57462   Mean   :  0.1499  
##  3rd Qu.:  1.4090   3rd Qu.:  1.4050   3rd Qu.:2.05373   3rd Qu.:  1.4050  
##  Max.   : 12.0260   Max.   : 12.0260   Max.   :9.32821   Max.   : 12.0260  
##  Direction 
##  Down:484  
##  Up  :605  
##            
##            
##            
## 
pairs(Weekly[, -9])

Lag variables show weak correlation with Direction.

(b) Logistic Regression

fit_weekly <- glm(Direction ~ Lag1 + Lag2 + Lag3 + Lag4 + Lag5 + Volume,
                  data = Weekly, family = binomial)
summary(fit_weekly)
## 
## Call:
## glm(formula = Direction ~ Lag1 + Lag2 + Lag3 + Lag4 + Lag5 + 
##     Volume, family = binomial, data = Weekly)
## 
## Coefficients:
##             Estimate Std. Error z value Pr(>|z|)   
## (Intercept)  0.26686    0.08593   3.106   0.0019 **
## Lag1        -0.04127    0.02641  -1.563   0.1181   
## Lag2         0.05844    0.02686   2.175   0.0296 * 
## Lag3        -0.01606    0.02666  -0.602   0.5469   
## Lag4        -0.02779    0.02646  -1.050   0.2937   
## Lag5        -0.01447    0.02638  -0.549   0.5833   
## Volume      -0.02274    0.03690  -0.616   0.5377   
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## (Dispersion parameter for binomial family taken to be 1)
## 
##     Null deviance: 1496.2  on 1088  degrees of freedom
## Residual deviance: 1486.4  on 1082  degrees of freedom
## AIC: 1500.4
## 
## Number of Fisher Scoring iterations: 4

Lag2 often appears statistically significant.

(c) Confusion Matrix

probs <- predict(fit_weekly, type = "response")
pred <- ifelse(probs > 0.5, "Up", "Down")
table(Predicted = pred, Actual = Weekly$Direction)
##          Actual
## Predicted Down  Up
##      Down   54  48
##      Up    430 557
mean(pred == Weekly$Direction)
## [1] 0.5610652

Accuracy is modest (~55–57%), only slightly better than random guessing.

(d) Train/Test Split

train <- Weekly$Year <= 2008

fit_train <- glm(Direction ~ Lag2,
                 data = Weekly[train, ], family = binomial)

probs_test <- predict(fit_train, newdata = Weekly[!train, ], type = "response")
pred_test <- ifelse(probs_test > 0.5, "Up", "Down")

table(Predicted = pred_test, Actual = Weekly$Direction[!train])
##          Actual
## Predicted Down Up
##      Down    9  5
##      Up     34 56
mean(pred_test == Weekly$Direction[!train])
## [1] 0.625

Out-of-sample accuracy remains modest (~60%), indicating limited predictive power.

Conclusion

This analysis demonstrates:

Overall, classical linear and logistic regression provide meaningful insights, though predictive performance remains limited in financial time-series contexts.