44. Regressing Bonus Against LTI

Question:

There are lots of finance features available, some of which might be more powerful than others in terms of predicting a person’s bonus. For example, suppose you thought about the data a bit and guess that the “long_term_incentive” feature, which is supposed to reward employees for contributing to the long-term health of the company, might be more closely related to a person’s bonus than their salary is.

A way to confirm that you’re right in this hypothesis is to regress the bonus against the long term incentive, and see if the regression score is significantly higher than regressing the bonus against the salary. Perform the regression of bonus against long term incentive--what’s the score on the test data?