Asked by Landrie Pierce on Jun 29, 2024
Verified
What is the key difference between weighted moving average and simple moving average approaches to forecasting?
Weighted Moving Average
A calculation that averages a series of values while giving different weights to different values, often used in financial analysis to smooth data.
Simple Moving Average
A method used in technical analysis to smooth out price data by creating a constantly updated average price over a specific period of time.
- Comprehend the principles and computational methods associated with moving average and exponential smoothing models.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
Simple moving averages are useful where there is no identifiable trend in the historical data, i.e. demand has been fairly steady over time. If there was an identifiable trend, weighted moving averages would provide a more accurate forecast since higher weights would be put on the most recent data.
Learning Objectives
- Comprehend the principles and computational methods associated with moving average and exponential smoothing models.
Related questions
Distinguish Between a Moving Average Model and an Exponential Smoothing ...
Smoothing Time Series Data by the Moving Average Method or ...
The Equation: S t = W⋅y t + (1 −W)⋅St− 1 (For ...
In Exponentially Smoothed Time Series,the Smoothing Constant W Is Chosen ...
Each Forecast Using the Method of Exponential Smoothing Depends on ...