Morrison on Metrics: How to use rolling averages

Moving averages give more up-to-date metrics

Among the many ways to understand data collected over time is to present and analyze it using what are called “moving averages.” Somewhat like smoothing data rather than using a single linear trend line, the topic of an earlier column, moving averages get away from overall metrics such as annual figures and instead show trends during shorter time periods, such as monthly or quarterly, and how they are varying within those periods. As each month or quarter contributes its data, the moving average changes.

We frequently hear the term “seasonally adjusted economic indicators.” This is not some complicated formula, but merely moving averages that show the bulges and declines peculiar to certain months as the year progresses. Likewise, stock market closes are often shown as moving averages to give a better sense of direction.

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Rees Morrison

Rees Morrison, Esq. is the founder of General Counsel Metrics, LLC. Based in Princeton, NJ, Rees has for the past 25 years consulted solely to...

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