Deseasonalizing a time series, Financial Management

Deseasonalizing a Time Series

The Ratio to Average Method allows us to identify the component of the seasonal variation in time series data and the indices themselves help us to nullify the effects of seasonality on the time series. The use of indices to nullify the seasonal effects in the common parlance is referred to as Deseasonalizing the time series. Deseasonalizing a time series involves dividing the original data points with the relevant seasonal index expressed as a percentage.

In our example, the deseasonalization process is carried out as follows.

Year

Quarter

Actual Data

Seasonal index/100

Deseasonalized data


(1)

(2)

(3)

(4)

(5) = (3)/(4)


1998

I

1

112.73/100

0.887

 

II

2

  98.41/100

2.032

 

III

2

118.10/100

1.693

 

IV

1

 70.77/100

1.413

The removal of the seasonal component helps us to analyze the components of secular, cyclical and irregular variations. The secular trend then obtained can be utilized for projecting the trend into the future.

Posted Date: 9/17/2012 3:43:27 AM | Location : United States







Related Discussions:- Deseasonalizing a time series, Assignment Help, Ask Question on Deseasonalizing a time series, Get Answer, Expert's Help, Deseasonalizing a time series Discussions

Write discussion on Deseasonalizing a time series
Your posts are moderated
Related Questions
QUESTION i) Discuss the risk associated with changes in exchange rates. ii) How can these risks be managed internally? iii) Explain how a manager can use a forward contra

Q. Describes the Concept of Time value of Money? 'Time value of money' signifies that the value of a unit of money is different in different time periods. The worth of a sum of

Analyze a Startup How would you select an organizational form for a business? Think about this question as you read the following scenario. Joe Jones has created a business

A computer products store stocks color graphics monitors, and the daily demand is normally distributed with a mean of 1.6 monitors and a standard deviation of 0.4 monitor. The lead

Beta Beta is a measure of the market risk, or methodical risk, of a particular privacy or portfolio. Systematic risk defines any risk that influences the value of a huge numbe

1. Using ratio analysis, compare your fifth year to the current year and discuss. 2. Compute the expected stock price at the end of the fifth year. Assume your stockholders hav

Repo rates vary from transaction to transaction. They depend upon a variety of factors like: Collateral's quality Repo term

Deferred coupon bonds are generally issued at a discount price and are used for financing leveraged buyouts. The coupon payment on these types o

How does the deposit-loan rate spread in the Eurodollar market compare with the deposit-loan rate spread in the domestic U.S. banking system?  Why? Answer: The deposit-loan sprea

Explain how a firm determines the optimal level of current assets. The best possible level of working capital is determined by finding the amount that balances the need for liq