What is seasonal variation in time series?
Seasonal variation is a regular pattern of fluctuation in a time series that repeats itself at fixed intervals, such as the seasons. Seasonal variations are typically caused by factors that are related to the seasons, such as:
- Weather: Weather can have a significant impact on many time series, such as sales of ice cream and heating oil.
- Holidays: Holidays can also cause seasonal variations in time series, such as sales of toys and flowers around Christmas.
- School terms: School terms can also cause seasonal variations in time series, such as sales of school supplies in the fall.
How to identify seasonal variation in time series
Seasonal variation can be identified by plotting the time series data on a graph and looking for a pattern of regular fluctuations that repeat themselves at fixed intervals.
How to deal with seasonal variation in time series
Seasonal variation can be dealt with in a number of ways, such as:
- Ignoring it: If the seasonal variation is small and does not have a significant impact on the overall trend of the time series, it can be ignored.
- Adjusting the data for the seasonal variation: This can be done by using statistical techniques, such as deseasonalizing the data.
- Modeling the seasonal variation and using the model to predict future values of the time series: This is often done in forecasting applications.
Multiple choice questions on seasonal variation in time series
Here are some multiple choice questions on seasonal variation in time series with answers:
- Which of the following is not a cause of seasonal variation in time series?
- Weather
- Holidays
- School terms
- Trend variation
- The answer is Trend variation. Trend variation is a long-term movement of the time series, while seasonal variation is a short-term fluctuation that repeats itself at fixed intervals.
- How can you identify seasonal variation in time series?
- By plotting the time series data on a graph
- By using statistical techniques, such as moving averages and regression analysis
- Both of the above
- None of the above
- The answer is Both of the above. You can identify seasonal variation in time series by plotting the time series data on a graph and by using statistical techniques, such as moving averages and regression analysis.
- What is the difference between seasonal variation and cyclical variation?
- Seasonal variation is a regular pattern that repeats itself at fixed intervals, while cyclical variation is an irregular pattern.
- Seasonal variation is a short-term fluctuation around the trend, while cyclical variation is a long-term movement of the time series.
- Seasonal variation is only useful for time series that have a clear trend.
- None of the above.
- The answer is The difference between seasonal variation and cyclical variation is that seasonal variation is a regular pattern that repeats itself at fixed intervals, while cyclical variation is an irregular pattern.