Unit 8 DiscussionDiscussion Topic

Time Series Model

A time series model is a forecasting technique that attempts to predict the future values of a variable by using only historical data on that one variable. Here are some examples of variables you can use to forecast. You may use a different source other than the ones listed (be sure to reference the website). There are many other variables you can use, as long as you have values that are recorded at successive intervals of time.

• Currency price: XE (http://www.xe.com/currencyconverter/) XE Currency Converter. (n.d.). Retrieved July 08, 2016, from http://www.xe.com/currencyconverter
• GNP: Trading Economics (http://www.tradingeconomics.com/united-states/gross-national-product) TRADING ECONOMICS | 300.00 INDICATORS | 196 COUNTRIES. (n.d.). Retrieved July 08, 2016, from http://www.tradingeconomics.com/united-states/gros…
• Average home sales: National Association of Realtors (http://www.realtor.org/topics/existing-home-sales) Existing-Home Sales. (n.d.). Retrieved July 08, 2016, from http://www.realtor.org/topics/existing-home-sales
• College tuition: National Center for Education Statistics (https://nces.ed.gov/fastfacts/display.asp?id=76) Existing-Home Sales. (n.d.). Retrieved July 08, 2016, from http://www.realtor.org/topics/existing-home-sales
• Weather temperature or precipitation: (http://www.weather.gov/help-past-weather) Existing-Home Sales. (n.d.). Retrieved July 08, 2016, from http://www.realtor.org/topics/existing-home-sales
• Stock price: Yahoo Finance (https://finance.yahoo.com) Yahoo Finance – Business Finance, Stock Market, Quotes, News. (n.d.). Retrieved July 08, 2016, from https://finance.yahoo.com/

Once you have historical data, address the following:

1. State the variable you are forecasting.
2. Collect data for any time horizon (daily, monthly, yearly). Select at least eight data values.
3. Use Excel QM to forecast using moving average, weighted moving average and exponential smoothing (see video in Live Binder).
4. Copy/paste the results of each method. Be sure to state the number of periods used in the moving average method, the weights used in the weighted moving average, and the value of alpha used in exponential smoothing. Be sure to include the MAD (mean absolute deviation) for each method.
5. Clearly state the “next period” prediction for each method.

See Example post.

First response: Choose a classmate’s post. Use the same data, forecast a trend projection using Excel QM. Share the graph and “next period” prediction. Based on the graph, do you think this is a good model for this variable?

See Example post.

Second response: Choose another classmate’s post. Compare the MAD (mean absolute deviation) of all three forecasts (moving average, weighted moving average and exponential smoothing) and state which forecasting method gives the most accurate forecast.

See Example post.