Start learning 50% faster. Sign in now
In time series analysis, the decomposition process breaks down the data into three components: trend, seasonality, and residuals. The residuals represent the random noise left after removing the trend and seasonality components. Ideally, the residuals should not show any patterns or trends, indicating that the model has captured all systematic information from the data. If the residuals are random, it suggests that the model has successfully accounted for both trend and seasonality. Hence, the fact that the residuals are randomly distributed indicates that the decomposition process is likely correct. Why Other Options Are Incorrect: • A: Overfitting refers to a model that captures too much noise in the data, not leaving random residuals. Overfitting typically results in residuals that show patterns, not randomness. • C: Residuals are an essential part of decomposition and should not be removed. They represent the noise or error in the model and are necessary for validating the model's fit. • D: The residuals should not reflect seasonality or trend, as these components are already removed during the decomposition process. Any structure in the residuals would indicate that the decomposition model has not fully captured the data's underlying patterns. • E: A model showing random residuals indicates that it has captured the key patterns in the data, and there is no immediate need to test other models.
Which person can be appointed as an agent?
What is the appropriate method for calculating the cost of inventory when there are significant fluctuations in purchase prices?
Calculate the average age of inventory(Assume 360 days in a year):
_________ is NOT a part of Monte Carlo Simulation.
Which of the following assessee is not liable to pay advance tax u/s 207?
How much percentage of salary is allowed for exemption in House rent allowance Section 10(13A) in case of metro city?
According to section 10 of Indian Contract Act, 1872, which of the following is not regarded as the essential elements of a valid contract?
What is relevant for determination of whether the supply is Intra-state or inter-state in GST?
As per General Financial Rules, 2017 who has been given full powers to make their own arrangements for procurement of goods and services, that are not a...
Which of the following section deals with deduction in respect of Interest on deposits in savings/FD account in case of resident senior citizens?