Is this really for your dissertation? I just can't believe it, dissertation is usually a part of your Ph.D. program and you are doing something like a multiple regression for your dissertation.  Anyway, here is what you should do: 1. Find some research articles that have provided some insights on your topic. Why did you choose interest rate and inflation for predicting ^DJI and ^FTSE. You can't just say that they are highly correlated and you assume that they can predict the variation in ^DJI or ^FTSE.  2. Check if you have high correlation between interest rate and inflation (remember Fisher's equation). If they are highly correlated then you have a problem of multicollinearity in your equation. 3. Now run equation for multiple linear regression using statistics tools such as eviews, R, etc. EVIEWS (very expensive): ls ftse c interest inflation # Check for t-stat, R squared, etc. R (freely available) fit <- lm(y ~ x1 + x2 + x3, data=mydata) summary(fit) # show results layout(matrix(c(1,2,3,4),2,2))  plot(fit) Last edited: 22-Mar-10 05:37 PM Last edited: 22-Mar-10 05:38 PM Last edited: 22-Mar-10 05:38 PM

Gajedi · Mar 22, 2010 5:37 PM