2.5 Trend-Season-Residual Decomposition

A common exploratory tool to use is to decompose a time series into

  1. Smooth long-term trend

  2. Seasonal variation

  3. Residual variation

The primary benefitis of looking at long-term trend and seasonal variation is that they are highly interpretable and are very common.

The examination of trend, season, and residuals for a time series is the beginning of a critical task in many time series analyses, which is time scale analysis.