Moving average Average
given time series such daily stock market prices or yearly temperatures people want create smoother series. helps show underlying trends or perhaps periodic behavior. easy way choose number n , create new series taking arithmetic mean of first n values, moving forward 1 place , on. simplest form of moving average. more complicated forms involve using weighted average. weighting can used enhance or suppress various periodic behavior , there extensive analysis of weightings use in literature on filtering. in digital signal processing term “moving average” used when sum of weights not 1.0 (so output series scaled version of averages). reason analyst interested in trend or periodic behavior. further generalization “autoregressive moving average”. in case average includes of calculated outputs. allows samples further in history affect current output.
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