Give a brief explanation of the time series additive and multiplicative models. What is the more popular model among these, and why?
Explain briefly the additive and multiplicative models of time series. Which of these models is more commonly used and why?
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Additive and Multiplicative Models of Time Series
1. Additive Model:
[ Y_t = T_t + S_t + \varepsilon_t ]
where:
2. Multiplicative Model:
[ Y_t = T_t \times S_t \times \varepsilon_t ]
3. Differences Between the Models:
Nature of Components:
Interpretation:
Use Cases:
4. Common Usage:
5. Example:
6. Conclusion: