Simple Moving Average
You are currently viewing a sample of the Cram Kit. Click here to unlock everything.
How to estimate values
With simple moving averages, to determine the estimated value for a given period, you'll take the average of the X periods before it.
Scenario: Given the yearly Tinder statistics from Delta Apple Pi at Crammer Nation University, determine the estimated values using a 3-point moving average.
| Year | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Tinder Matches | 1204 | 1329 | 1297 | 1432 | 1406 |
| Estimated (y-tilde) | - | - | ??? | ??? | ??? |
y-tildet is the estimated value for a current period "t".
MA(L) is the Moving Average of the previous L periods.
Given L = 3...
| Year | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Tinder Matches | 1204 | 1329 | 1297 | 1432 | 1406 |
| Estimated | - | - | ??? | ??? | ??? |
t-tilde2021 = (1204 + 1329 + 1297) / 3
t-tilde2021 = (3830) / 3
t-tilde2021 = 1276.67
| Year | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Tinder Matches | 1204 | 1329 | 1297 | 1432 | 1406 |
| Estimated | - | - | 1276.67 | ??? | ??? |
| Year | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Tinder Matches | 1204 | 1329 | 1297 | 1432 | 1406 |
| Estimated (y-hat) | - | - | 1276.67 | 1352.67 | 1378.33 |
Impact of L
In the graph below...
- L = 2 is more reactive to the current values
- L = 6 is
less reactive to the current values
This is because we're taking the average of more values, so an individual value is less impactful on the forecast!