Exercise

# Linear regression model

In this exercise you're going to use the **Fama French model** to explain the returns in your portfolio. You'll first walk through the linear regression model taking all the different steps, and obtain the **summary** at the end to **interpret the results**.

In this exercise you'll use ** statsmodels**. You might have come across the linear regression model in

`scikit-learn`

. If you are curious how the two options compare, you can read more in this blogpost. Available is a dataset called `factor_returns`

which contains portfolio returns as well as the Fama French factors. Good luck!

Instructions 1/4

**undefined XP**

- Define and fit the linear regression model. Use the three Fama French factors, i.e.
`Mkt-RF`

,`SMB`

,`HML`

to explain the`pf_returns`

.