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Hi Sir, Hope you are well.
I wanted to ask that when we find trend values using moving averages. How i supposed to know how many month averages should be calculates.
Like, in open tution lectures, 4 months avrages were calculated and after that 2 averaged values were averaged again.
But while i trying to solve Textbook illustrations , in solution they used 3 months averages. And they didn’t do re-average.
I was confused by this.
Questions make it clear over what periods the seasonality occurs.
If you can given the figures for periods of 3 months, then because there are four 3 monthly periods in a year we take a 4 period moving average.
If the figures are given for periods of four months, then because there are three 4 month periods in a year we take a 3 period moving average.
And so on.
When it comes to centering the averages, if we have taken 4 period moving averages then we need to then take a second average to centre them. If on the other hand we have taken 3 period moving averages then the averages are already in the centre and we do not need to take a second average.