Hi everyone on Statalist,
I am working on a project and have run into a few obstacles.
The purpose of my project is to conduct a regression analysis, with the stock price of a company as a dependent variable. For independent variables, I have used Oil Price, Google Trends activity, average temperature deviation in the country where the company is from and USD/NOK exchange rate. These variables are all daily variables, and I have only included dates where we have values on all the above-mentioned variables.
To verify my assumptions, I want to test for the CLRM assumptions. I tested for linearity by generating scatter plots with the different independent variables against the dependent variable, but the scatterplots do not show linearity. See a few examples of the scatterplots below.
What can I do about this? Should I transform the variables? Does the problem lie in the fact that my Y variable is stock price?
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![Click image for larger version
Name: Skjermbilde 2019-11-21 kl. 16.54.57.png
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![Click image for larger version
Name: Skjermbilde 2019-11-21 kl. 16.56.48.png
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ID: 1525780](filedata/fetch?id=1525780&d=1574351822&type=full)
I am really lost and a beginner at regression analysis so please excuse me if this question is a little basic.
Thanks a lot in advance!
I am working on a project and have run into a few obstacles.
The purpose of my project is to conduct a regression analysis, with the stock price of a company as a dependent variable. For independent variables, I have used Oil Price, Google Trends activity, average temperature deviation in the country where the company is from and USD/NOK exchange rate. These variables are all daily variables, and I have only included dates where we have values on all the above-mentioned variables.
To verify my assumptions, I want to test for the CLRM assumptions. I tested for linearity by generating scatter plots with the different independent variables against the dependent variable, but the scatterplots do not show linearity. See a few examples of the scatterplots below.
What can I do about this? Should I transform the variables? Does the problem lie in the fact that my Y variable is stock price?
I am really lost and a beginner at regression analysis so please excuse me if this question is a little basic.
Thanks a lot in advance!
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