Components of time series

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What are the components of time series?

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The components of time series include Trend, Seasonal Variations, Cyclical Variations, and Irregular Fluctuations.

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Define Trend in time series analysis.

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Trend refers to the long-term movement or direction in data over time, indicating a general increase or decrease.

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What are Seasonal Variations?

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Seasonal Variations are patterns that repeat at regular intervals due to seasonal factors, such as increased demand during holidays.

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Explain Cyclical Variations in time series.

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Cyclical Variations are long-term fluctuations that occur over several years, often related to economic or business cycles.

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What are Irregular Fluctuations?

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Irregular Fluctuations are unpredictable and random variations in data that do not follow a pattern.

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Example of Seasonal Variation:

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The increase in ice cream sales during summer months.

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Example of Trend:

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The steady increase in the price of real estate over the years.

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Example of Cyclical Variation:

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The rise and fall of stock prices over a business cycle.

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Example of Irregular Fluctuation:

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A sudden drop in tourism due to a natural disaster.

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How do Seasonal Variations affect business planning?

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Businesses can anticipate demand changes and adjust inventory and marketing strategies accordingly.