If one is trying to explain the time series variation in a stock price for a company by using the number of Twitter mentions that day, which method is most appropriate?
A) Dichotomous treatment regression
B) Simple regression
C) Two stage least squares
D) Probit

Question

Quizplus · Accepted Answer

Simple regression is the most appropriate method for explaining the time series variation in a stock price using the number of Twitter mentions that day. Simple regression allows us to estimate the linear relationship between the two variables and determine the strength and significance of the relationship. Dichotomous treatment regression and probit are typically used when the dependent variable is binary, and two-stage least squares is used when endogeneity is a concern.

If One Is Trying to Explain the Time Series Variation