1. STAT 104: Section 2 4 Oct, 2007 TF: Daniel Moon

2. TF Daniel Moon G2 (A.M. in Statistics Dept) Email: moon@fas.harvard.edumoon@fas.harvard.edu Office hour: Th. PM 4:10-5:10, 6 th Floor, 600 Interest: Quantitative methods in finance I want my section to be interactive and helpful. Any questions? Feel free to ask…

3. Agenda of Today Scatter Plot Correlation Linear Regression Lurking Variable Association vs. Causation

4. Scatter Plot

5. Correlation

6. Example: Stupid H vs. Wise W

7. Linear Regression

8. Checking Linear Regression

9. Lurking Variable A variable not among the explanatory or response variables that influences the interpretation From aggregate data Sol: Plot the residuals against time and other variables that may influence the results

10. Linear Regression

12. Association vs. Causation