Chapter 3 (Time series decomposition)

Question 1

Purpose of transformation/adjustments

Answer 1

make the pattern more consistent across the whole data set

Question 2

Box-cox transformation

Answer 2

best applied if data shows variation that increases or decreases with the level of the series

pick ‘parameter’ that balances seasonal fluctuations

Question 3

Seasonally adjusted data

Answer 3

data where the seasonal component is removed (left with trend and remainder)

Question 4

Moving average

Answer 4

Estimate the trend-cycle by averaging values of the time series

aims to eliminate randomness in data

Question 5

STL decomposition

Answer 5

method used to decompose a time series into three main components: seasonal, trend, and remainder components

helps us understand the data