14.4 Residuals

Residuals are the random fluctuations left over after trend and seasonality are removed.

• Unpredictable, random, “residual” fluctuations

• Due to random variations of Nature, Accidents or unusual events

• Noise in the time series

• They are what is left over after trend and seasonality are removed from the original time series.

• You should not see a trend or seasonal pattern in the residual.

• They represent short-term fluctuations.

• They are either random or a portion of the trend or seasonality components was missed in the decomposition