An online investment blogger advises investing in mutual funds that have performed badly the past year because "regression to the mean tells us that they will do well next year." Is he correc Choose the correct answer below. O A. No, he is incorrect. The mutual fund will regress to the mean, but it may not do so for a few years. O B. No, he is incorrect. There is no reason to assume that mutual fund returns will regress to the mean. The fund manager may be poor at choosing stocks. O C. No, he is incorrect. The mutual fund will regress to the mean, but this does not mean it will have a positive return. O D. Yes, he is correct. The mutual fund will regress to the mean, which will result in a positive return from the funds.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
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