Google Spreadsheets for teaching probability?

In business schools it is common to teach statistics courses using Microsoft Excel, due to its wide accessibility and the familiarity of business students with the software. There is a large debate regarding this practice, but at this point the reality is clear: the figure that I am familiar with is about 50% of basic stat courses in b-schools use Excel and 50% use statistical software such as Minitab or JMP. Another trend is moving from offline software to “cloud computing” — Software such as www.statcrunch.com offer basic stat functions in an online, collaborative, social-networky style. Following the popularity of … Continue reading Google Spreadsheets for teaching probability?

Moving Average chart in Excel: what is plotted?

In my recent book Practical Time Series Forecasting: A Practical Guide, I included an example of using Microsoft Excel’s moving average plot to suppress monthly seasonality. This is done by creating a line plot of the series over time and then Add Trendline > Moving Average (see my post about suppressing seasonality). The purpose of adding the moving average trendline to a time plot is to better see a trend in the data, by suppressing seasonality. A moving average with window width w means averaging across each set of w consecutive values. For visualizing a time series, we typically use a centered moving average … Continue reading Moving Average chart in Excel: what is plotted?

Visualizing time series: suppressing one pattern to enhance another pattern

Visualizing a time series is an essential step in exploring its behavior. Statisticians think of a time series as a combination of four components: trend, seasonality, level and noise. All real-world series contain a level and noise, but not necessarily a trend and/or seasonality. It is important to determine whether trend and/or seasonality exist in a series in order to choose appropriate models and methods for descriptive or forecasting purposes. Hence, looking at a time plot,  typical questions include: is there a trend? if so, what type of function can approximate it? (linear, exponential, etc.) is the trend fixed throughout the period … Continue reading Visualizing time series: suppressing one pattern to enhance another pattern