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:
“What strikes many twin researchers now is not how much identical twins are alike, but rather how different they are, given the same genetic makeup....Multiples don’t walk around in lockstep, talking in unison, thinking identical thoughts. The bond for normal twins, whether they are identical or fraternal, is based on how they, as individuals who are keenly aware of the differences between them, learn to relate to one another.”
—Pamela Patrick Novotny (20th century)
“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)
“I know what love is. It’s understanding. It’s you and me and let the rest of the world go by. Just the two of us living our lives together happily and proudly. No self-torture and no doubt. It’s enduring and it’s everlasting. Nothing can change it. Nothing can change us, Ollie. That’s what I think love is.”
—Dewitt Bodeen (1908–1988)