Time Series Analysis Example 1

1. says

Sir i really do not understand the averaging part, i am trying so hard to see what point am i missing but i do not, why do not we find the average of each year individually instead for example we are taking the second quarter of the first year and the first quarter of second year and finding their average and so on…
Also the moving average part.

2. says

why didnt we find the next 4 moving average of the moving averages to find the Trend but rather find the average of 2 moving averages.
If the trend find is to be plotted on a graph, the line is not perfectly straight, so can one continue to average the and if yes will it be average of 2 of the trend figures or what?. I realised that if the sales is averaged on every 4 sales basis throughout until two point are gotten, the line will be straight. Can it be done practically and academically?

• says

The 4 quarter moving average was to get the average sales per quarter.
The only reason for centering it is because the middle quarter did not coincide with any one actual quarter. After centering it, we can then compare the actual sales in a quarter with the ‘average’ sales in the quarter.

There would be no point in keep averaging. The only point is to average out the seasonality. In practice, the trend may be a smooth pattern (either linear or curved) and would be easier then to forecast than the actual sales which keep going up and down because of the seasonality.

3. says

thank you sir,i realy loved your lecture.very clear and easy to understand,

• says

Because there is no average to compare them to.
(They are not left out in calculating the moving averages)

• says

You only need to centre the average if it is an even number of periods. If it is an odd number of periods then the moving average already corresponds to one of the periods.