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Chapter 12

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 The long term general movement of the data.

Cyclical variations The economic cycle of booms and slumps.

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

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

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