Component of time series analysis

There are four components of time series, are -

i. Secular trend (T)

ii.Seasonal variations (S)

iii.Cyclical variations (C)

iv.Irregular variations (I)

i.Secular trends (T):

1. A secular is a long term movements consisting from one year to ten years.
2. These movements are smooth, steady & regular.
3. These movements may be slow or fast but systematic in nature.
4. The secular trends is entirely upward or downward directions.

Example: The development of education, gas & petroleum have replaced fire wood & coal.

ii.Seasonal variation (S):

1. Seasonal variations are caused by the change in season.
2. These movements are short term variations containing one year.
3. A year may be divided in to two, three or more seasons.
4. Business activities are found to have brisk & slack periods at different part of the year.

Example: Increase of prices of shoes near Eid, decrease of sale of ice-cream in winter season.

iii.Cyclical variations:

1. Cyclical fluctuations is another type of periodic movement, where the period is more than a year.
2. Such movements are fairly regular & oscillatory in nature.
3. Cyclical fluctuation is found to exist in most of the business & economic time series, where it is known as business cycle.
4. These movements are in the form of waves & like the business cycles.

iv.Irregular variation:

1. Irregular variation is also called erratic movements or random variation or chance variations or accidental variations.
2. Sometimes these are sudden movements in the time series.
3. These movements are due to sudden causes like floods, strikes, wars etc.
4. These variations are unsystematic & accidental in nature & cannot be controlled.

Example: the increase in prices due to war, a sudden decrease in supplies due to floods.