Decomposition Based On Rates of Change
This is an important technique for all types of time series analysis, especially for seasonal adjustment. It seeks to construct, from an observed time series, a number of component series (that could be used to reconstruct the original by additions or multiplications) where each of these has a certain characteristic or type of behaviour. For example, monthly or quarterly economic time series are usually decomposed into:
- the Trend Component that reflects the long term progression of the series (secular variation)
- the Cyclical Component that describes repeated but non-periodic fluctuations, possibly caused by the economic cycle
- the Seasonal Component reflecting seasonality (seasonal variation)
- the Irregular Component (or "noise") that describes random, irregular influences. It represents the residuals of the time series after the other components have been removed.
An example of statistical software for this type of decomposition is the program BV4.1 that is based on the so-called Berlin procedure.
Kendall shows an example of a decomposition into smooth, seasonal and irregular factors for a set of data containing values of the monthly aircraft miles flown by UK airlines.
Read more about this topic: Decomposition Of Time Series
Famous quotes containing the words based, rates and/or change:
“I have no acting technique.... I act instinctively. Thats why I cant play any role that isnt based on something in my life.”
—Ethel Waters (19001977)
“Families suffered badly under industrialization, but they survived, and the lives of men, women, and children improved. Children, once marginal and exploited figures, have moved to a position of greater protection and respect,... The historic decline in the overall death rates for children is an astonishing social fact, notwithstanding the disgraceful infant mortality figures for the poor and minorities. Like the decline in death from childbirth for women, this is a stunning achievement.”
—Joseph Featherstone (20th century)
“The change from storm and winter to serene and mild weather, from dark and sluggish hours to bright and elastic ones, is a memorable crisis which all things proclaim. It is seemingly instantaneous at last.”
—Henry David Thoreau (18171862)