Page 271 - F2 - MA Integrated Workbook STUDENT 2018-19

Statistical techniques

Time series analysis

Time series analysis uses moving averages to create a trend line over time,
established from historical data, that, when adjusted for seasonal variations, can
then be used to make predictions for the future.

5.1 Components of a time series

The trend is the long term general movement of the data.

Cyclical variations are economic cycles of booms and slumps.

Season variations are a regular variation around the trend over a fixed
time period, usually one year.

Residual variations are irregular, random fluctuations in the data usually
caused by factors specific to the time series

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