First, a word of caution: one person's waste might be another person's treasure, and this is true for outliers. For example, for the week of 2/5/2018 to 2/15/2018, the Dow Jones Industrial Average (DJIA) suffers a huge loss. Cheng and Hum (2018) show that the index travels more than 22,000 points, as shown in the following table:
|
Weekday
|
Points
|
|
Monday |
5,113 |
|
Tuesday |
5,460 |
|
Wednesday |
2,886 |
|
Thursday |
3,369 |
|
Friday |
5,425 |
|
Total |
22,253 |
Table 5.1 Dow Jones industrial average points traveled
If we want to study the relationship between a stock and the DJIA index, the observations might be treated as outliers. However, when studying the topic related to the impact of the ...
