Econometrics: Using Ethereum To Predict The Price Of Leo Token
Econometrics is concerned using statistical analysis techniques to make inference from data. The data we shall be using are the prices of ethereum to predict the price of leo.
The model we shall be using here is called linear regression. It is used to forecast trend in price of crypto. When everything still remains normal. It is necessary for investor decision analysis process.
A brief about linear regression
Linear regression is a predictive analysis tool for two variables with one been the dependent and the other been the independent variable. The outcome of the analysis presented in the form;
Leo price = constant + Constant2 * ethereum price
It is essential to satisfy the following requirements before proceeding to predictive analysis.
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variables in question must be related.
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variables must be normal (drawn from same population)
To predict the price of leo token when knowing the price of ethereum, we shall carryout the following.
Data entry of both crypto prices. The data of both ethereum and leo prices can be seen below in both data and variable view mode.
Variable view mode
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Data view mode
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Satisfaction for correlation test
Analysis of correlation has been presented between the price of ethereum and that of leo token for the month of June 4 – August 10, 2022.
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It can be seen for the duration of time there is a high form of correlation between ethereum and leo price r = (0.935). As the price of ether experiences bull, the price of leo will be bullish and vice versa.
Satisfaction for normality test
This test proves that our variables are normal and hence drawn from the crypto market sample population. It can be seen below. Normality test has the hypothesis that the variables are not normal. But from our test we can see a significance level of 0.00 in both prices telling us that the data is normal.
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Predicting the price of leo from ethereum
The following output are important in determining the price of Leo from Ethereum price.
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The first table shows the result that we have to enter the price of ethereum in this analysis to be able to predict that of leo token.
The second table shows our model summary. It is essential to measure the performance of both funds against a bench mark. This means that linear regression explains 87.3% with indication of a perfect correlation when we consider the R square. Adjusted R square is useful when there are multiple variables used for the analysis but in this case its only ethereum and leo so both remains same.
Anova table
The anova table has the null hypothesis that there is no linear relationship between ethereum and leo token. But it can be seen below with a significance of 0.00 that there is a relationship between both tokens.
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Coefficient table This gives the final estimation of the price of leo. Considering the B value, we can say to calculate the price of leo, use the formular below.
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Leo Price = 0.011 + 0.000004163 * ethereum price
Prove Lets check if the fomular is right or wrong.
When the price of ethereum is $1847.17 today 10th August, 2022, Price of leo = 0.011 + 0.00004163 * 1847.17 = 0.0878
Conclusion The result from this analysis may not be precise due to some little discrepancies in price collection time but it will fall between the range.
For instance, the price of ethereum was gotten on the 10th, August, 2022. And the equivalent price of leo then was 0.08145. close to 0.08. But in my next entry, I will check for time similarities between them to correct.
All of this was carried out using SPSS application.
Thanks for reading.
