Sometimes, we need to arrange or frame the collection of data items in particular time periods or intervals. A time series is a collection of data items that arrange in certain frequency ranges. Time series analysis is a technique for looking at or evaluating time series data. Analysis data is one of the most useful applications for carrying out numerous necessities in Microsoft Excel. In this article, we will demonstrate the procedures to analyze time-series data in Excel.
What Is Time Series?
A Time Series is a data collection that records a sample across time. For example, it enables one to examine how various variables are affected by various circumstances throughout time. Time series analysis may be helpful for many things. For example, to see the evolution of a certain asset, commodity, or financial characteristic over time.
A Time Series Analysis is the set of data items that are classified into time order. Time series analysis gathers data over a period of time. And we use those data points to monitor changes over time. And often include repeat measurements taken from the same source over a period of time. We can obtain the time series’ components by recording a process’ data at specific intervals.
Step-by-Step Procedures to Analyze Time Series in Excel
Analyzing time series enables the examination of characteristics throughout time. A time series is a collection of data points. That is arranged chronologically. And collected at regular intervals of time daily, annually, etc. Let’s follow the procedures to analyze time-series data in Excel.
Step 1: Input Time Series Data
To illustrate the time series analysis, we are going to use a company’s quarterly revenue in two specific years. For instance, we need to input the time series data properly.
- Firstly, we put the year series data in column B. In our case, it has only been two years.
- Secondly, input the quarter of each year.
- Thirdly, just insert the total revenue in every quarter.
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Step 2: Enable Data Analysis Feature
Excel Data Analysis feature gives us more ability to comprehend our data. Additionally, analyzing data offers superior visual insights, statistics, and structures. But this feature remains disabled by default. To enable the tool, we have to follow the sub-steps below.
- In the first place, go to the File tab from the ribbon.
- This will take to the backstage of the excel menus.
- Then, go to the Options menu which you found in the bottom left corner of the excel backstage menu.
- Further, the Excel Options dialog box will appear.
- Afterward, go to Add-ins, and under the Add-ins option select the Analysis Toolpak.
- Subsequently, choose the Excel Add-ins from the Manage drop-down menu.
- Furthermore, click on the Go button.
- The Add-ins window will come up.
- Consequently, checkmark the Analysis Toolpak.
- Finally, click on the Ok button to complete the procedures.
- In this way, we will get the Data Analysis button under the Data tab.
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Step 3: Execute Statistical Analysis
Statistical analysis is the gathering and evaluation of data to find relationships and correlations. It belongs to the data analytics feature. Now, we will prepare the essential information to carry out Statistical Analysis. Follow the procedure below as a result.
- To begin with, go to the Data tab from the ribbon.
- Then, click on the Data Analysis tool under the Analysis group.
- As a result, the Data Analysis dialog box will pop up.
- Now, scroll down a little bit and select Exponential Smoothing.
- Subsequently, click on the OK button.
- Accordingly, this will display the Exponential Smoothing dialog box.
- Next, select the cell range in the Input Range field. In this case, we select the range $D$5:$D$12 which is the Revenue column.
- Further, specify the Damping factor as per requirement.
- Then, select the range $E$5 in the Output Range field.
- Furthermore, checkmark the Chart Output and Standard Errors boxes.
- Finally, click OK to finish the procedures.
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Final Output to Analyze Time Series Data in Excel
After clicking the OK button on the Exponential Smoothing, this will return us to the excel workbook with two new columns and a graph chart.
- The Smoothed Level and Standard Error columns represent the outcomes of the statistical analysis.
- If we take a closer look at the smoothed levels, we can see that the column contains the following formula.
- If we examine the standard errors, we can see that the formula of the combination of the SQRT and SUMXMY2 functions, in the column is as follows.
- And we will also get a graphical representation of the Revenue and a forecast.
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Time Series Forecasting in Excel
In order to identify recurrent temporal relationships and correlations, we frequently utilize Excel. We use it to examine time-series data. Such as sales, server use, or inventory data. We must first ensure that our time-based series data collection is complete before we can generate a forecast sheet. A chart plots a time series over time. A time-series analysis may include three elements. And the elements are level, trend, and seasonality.
- Firstly, select the Actual revenue curve line.
- Secondly, right-click on the mouse, this will open the context menu.
- Thirdly, select Add Trendline.
- The Format Trendline window will therefore show up on the right side of the spreadsheets.
- Further, check for Polynomial options from the Trendline Options.
- Checkmark the Display Equation on chart and Display R-squared value on chart boxes after that.
- Furthermore, view the illustration below for a better understanding.
- In the forecast models, the polynomial trend line has a lower error rate.
- As a result, the required trend line will be returned in the graph.
- Once more, choose Linear if you like to have a linear trend line.
- Then, mention the periods, in our case we mention the Forward period under the Forcast option.
- As a result, it will display a linear trend line next to the actual data on the graph.
- Moreover, suppose we want to forecast exponential dependence. For this, we are using the GROWTH function. GROWTH delivers the y-values for a set of new x-values. And, that you specify by leveraging pre-existing x-values and y-values. We can also use this function to fit an exponential curve to already-existing x- and y-values.
- So, we insert a new column named Forecast.
- Thus, select the cell where you want the result of the forecast value using the GROWTH function.
- Then, put the formula into that selected cell.
- Lastly, to finish the computation, hit the Enter key.
- Now, drag the Fill Handle down to duplicate the formula over the range. Or, to AutoFill the range, double-click on the plus (+) symbol.
- Finally, you can see the prediction for the revenue.
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The above procedures will assist you to Analyze Time Series Data in Excel. Hope this will help you! Please let us know in the comment section if you have any questions, suggestions, or feedback.
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