Question

There are four components to a time series: secular trend, cyclical variation, seasonal variation, and irregular variation. Research these components and explain the differences as well.

Answer 1

Secular trend-One of the main components of time series. The trend may show the growth or decline in a time series. We come across the time series where we can see that the series is showing Decreasing or Increasing pattern with respect to time. For eg-Global temperature Increases with respect to time. This is Increasing trend.

Seasonal trend-These are short term movements occuring due ti seasonal factors. The short term is considered as a period in which changes may occur in a time series in weather or festives. For eg-The sale of umbrellas or rain coats is higher in monsoon season. This is seasonal trend where the season comes after every one year in Monsoon.

Cyclic movements-These are long term oscillations occuring in time series. They are mostly observed in economics data and period of such oscillations ranges from 5-10 years or even more. They are associated with well known business Cycle.

Irregular Fluctuations-These occurs suddenly which are unlikely to be repeated. They are components of time series which cannot be explained by trends or seasonal or cyclic factors. Due to Earthquakes, Natural calamities or drought, etc these Fluctuations can happen. They are kind of random component.