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Times series analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Times series analysis

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by AvatarJohn Moffat.
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  • November 5, 2020 at 6:46 pm #594184
    AvatarMohapy
    Participant
    • Topics: 11
    • Replies: 3
    • ☆

    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.

    November 6, 2020 at 9:10 am #594227
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54846
    • ☆☆☆☆☆

    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%.

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