Friday Sep 12, 2008
Friday Sep 12, 2008
I introduce you to the moving average. The concept is simple, replace each data point with the average of the last X data points (including that data point). No more looking at graphs like the following and trying to understand the overall trend...
Instead, use a moving average graph like the following twelve-month moving average to filter out seasonal noise and get a clear picture of what is going on...
Omniture SiteCatalyst has a built in feature to do this.
I have a strong warning to give about an ugly mistake you can only make once - Make sure you have enough data points preceding your starting point. For example, in the above graph, the first data point with a calculated moving average is September. For this graph to be correct, the preceding eleven months need to have complete data. For this data set, the month preceding the first October is when tracking began, so the twelve-month moving average can only be calculated twelve months from October.. If I had started my moving average at the first June, then the moving average would be very low because I am missing three months of data in my computation (Jul-Sep).