Module 4 - Time Series Decomposition

bias

an error that does not equal to 0 on average

positively biased

if the error is positive on average

negative biased

if the error is negative on average

unbiased

if the error is equal to 0 on average

cycle

• the medium low frequency of a time series

• represents the average movement of a series around its trend

detrended

• a series that is detrended when its trend component has be removed

• a line chart should no longer show very low frequency fluctuations

high frequency

this type of fluctuations include the seasonal and irregular components only

irregular

• the very high frequency components of a time series, aka residual

• it is the least important component for this course b/c it is the most likely to be affected by measurement errors

low frequency

this type of fluctuations include the trend and the cyclical components only

measurement error

• the error produced by the estimation of a variable

• every variable that we do not directly observe contains this

seasonally adjusted

• the seasonal fluctuations have be removed from the series

• aka deseasonalized

seasonality

• this is the medium high frequency of a time series

• represents the common fluctuations that we observe each year

trend

• this is the very low frequency of a time series

• represents the average behaviour of a series over a long period of time