chpt 17 Flashcards
What is time series
a sequence of observations on a variable measured at successive points in time or over successive periods of time
Define the types of measurements in time series
hourly daily weekly monthly yearly or at any other regular interval
What is the pattern of data in time series
important factor in understanding how the time series has behaved in the past
- if such behaviour can be expected in the future, we can use the past pattern to guide us in selecting an appropriate forecasting model
What are the steps in time series
- construct a time series plot ////
What does a time series plot show us
graphical presentation of the relationship b/w time and the time series variable
- time or horizontal axis and time series on vertical axis
What are the common type of data patterns in time series
- horizontal pattern
- trend pattern
- seasonal pattern
- trend and seasonal pattern
- cyclical pattern
Describe the horizontal pattern
data fluctuates around a constant mean
describe statistical series
used to denote a time series who statistical properties are independent of time it means that
- the process generating the data has a constant mean
- the variabiity of the time series is constant over time
Is simply observing a horizontal patter enough evidence to conclude that the time series is stationary
no
What makes it difficult to choose an appropriate forecasting model
changes in business conditions
- in many situations it is important to select a forecasting method that adapts well to changes in the level of a time series
Describe Trend pattern
a time series pattern may also show gradual sifts of movement to relatively higher or low values over a longer period of time, this type of behavour, we say a trend pattern exists
What usually causes trend patterns
population increases or decreases
- changes in demographic characteristics of teh pop
- technology, and / or consumer preferences
Describe exponential relationships
appropriate when the % change from one period to the next is relatively constant
Describe seasonal patterns
seeing the same repeating patterns over successive periods of time
- ex poo co expects lower sales in fall and winter months and peak sales in spring and summer
- you might conclude that the data follows a horizontal pattern but a closer look you can see a regular pattern
Describe trend and seasonal pattern
combination of trend and seasonal pattern
- we need a forecasting method that can deal with both rend and seasonality
Describe cyclical pattern
- an alternating sequence of points below and above the trend line lasting more than one year
- many economic?
- often the cyclical component is due to multi-year business cycles
- ex. periods of moderate inflation followed by periods of rapid inflation can lead to time series that alternate below and above a generally increasing trend line (ie time series for housing costs)
- extremely difficult if not impossible to forecast
how difficult is Naive forecasting
it’s simple
Describe Naive forecasting
- several measures used to determine how well a particular forecast method is able to reproduce the time series data that are already available
- select the method that has the best accuracy for the data already known, we hope to increase the likelihood that we can obtain better forecast for future periods
What is the formula for forecast error
Forecast Error = Actual value - Forecast
What are the measures of forecast accuracy
- mean or avg of forecast errors
- Absolute mean error
- Computing the avg of squared forecast errors (mean squared error)
What is the formula for Mean or Avg of Forecast Errors
sum (forecast error) / n-1
WHat can be said if the mean or avg forecast is positive
- the ovserved values tend to be greater than forecasted
-
What is the issue with the Mean or avg forecast method
b/c positive and negative forecast errors tend to offset one another, the mean error is likely to be small adn tehrefore not very useful
What is the formula for the absolute mean error
MAE = avg of absolute value of forecast errors