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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Times series analysis
I would like to get more clarification on why should sum of seasonal variations in terms units be zero and 400% in terms of multiplecative model.
Because they are differences from the average.
With the additive model, some are higher than average and some are lower than average and they should cancel out and give a total of zero.
With the multiplicative model some are more than 100% of average and some are less than 100% of average. In total (when are are 4 seasons) then again they should cancel out and the total be 400%.