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Appendix 7

Appendix 7. Statistical Tools Arithmetic Mean Geometric Mean Standard Deviation Correlation Regression Analysis. You own 100 shares of IBM which is selling at $96, 200 shares of Disney which is trading at $106, and 500 shares of Iddex which is trading at $15.

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Appendix 7

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  1. Appendix 7 • Statistical Tools • Arithmetic Mean • Geometric Mean • Standard Deviation • Correlation • Regression Analysis

  2. You own 100 shares of IBM which is selling at $96, 200 shares of Disney which is trading at $106, and 500 shares of Iddex which is trading at $15. • Calculate the arithmetic and geometric means for these stocks. • Calculate the weighted average for these stocks.

  3. Arithmetic Mean • 96 + 106 + 15 = $72.33 • 3 • Geometric Mean • {96 * 106 * 15 }1/3 = $53.44 • Weighted Average • (100 * 96) +(200 *106) + (500 * 15) = $47.875 • 800

  4. Example of Arithmetic vs. Geometric • Year Price of Idexx • 0 $ 15 • 1 $20 • 2 $17 • 3 $25 • Calculate the percentage change in the price of Idexx each year. • Calculate the Arithmetic and Geometric means.

  5. Variance • s2 = E ( rn - r )2 • n - 1 • Calculate the variance of Idexx’s stock price.

  6. Correlation • Ra,b = Covariance of AB • (Std.Dev. A)(Std. Dev. B)

  7. Regression Analysis • rs = a + b rm + e

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