This report presents a statistical analysis of the relationship between the All-Ordinaries Index and the rate of inflation from 1995 to 2015. It begins with graphical representations of the trends in both variables, followed by a scatter plot illustrating their relationship. Numerical summaries and correlation coefficients are provided to quantify the association between the variables. A simple linear regression model is then developed, with the All-Ordinaries Index as the dependent variable and the inflation rate as the independent variable. The regression results, including coefficients, R-squared value, p-value, and standard error, are interpreted to assess the statistical significance and goodness of fit of the model. The analysis reveals a weak, positive correlation between the two variables, with inflation explaining only a small percentage of the variation in the All-Ordinaries Index. The conclusion suggests that the obtained relationship is statistically not valid due to a high p-value and a large standard error, indicating a poor fit of the model.
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