3-6 Simple regression: An Example Suppose that we have the following data on the excess returns on a fund manager' s portfolio(“fundⅹxX” together with the excess returns on a market index: Year t Ex cess return Excess return on market index r 178 39.0 23.2 12.8 69 242 16.8 17.2 12.3 We therefore want to find whether there appears to be a relationship between x and y given the data that we have. The first stage would be to form a scatter plot of the two variables.3-6 Simple Regression: An Example • Suppose that we have the following data on the excess returns on a fund manager’s portfolio (“fund XXX”) together with the excess returns on a market index: • We therefore want to find whether there appears to be a relationship between x and y given the data that we have. The first stage would be to form a scatter plot of the two variables. Year, t Excess return = rXXX,t – rft Excess return on market index = rmt - rft 1 17.8 13.7 2 39.0 23.2 3 12.8 6.9 4 24.2 16.8 5 17.2 12.3