A1 e)

Moving Averages and Centered Moving Averages

A couple of points about seasonality in a time series bear repeating, even if they seem
obvious. One is that the term “season” does not necessarily refer to the four seasons of the
year that result from the tilting of the Earth’s axis. In predictive analytics, “season” often
means precisely that, because many of the phenomena that we study do vary along with the
progression of spring through winter: sales of winter or summer gear, incidence of certain
widespread diseases, weather events caused by the location of the jet stream and changes in
the temperature of the water in the eastern Pacific Ocean, and so on.

Equally, events that occur regularly can act like meteorological seasons, even though they
have only a tenuous connection to the solstices and equinoxes. Eight-hour shifts in hospitals
and factories often get expressed in the incidence of intakes and expenditures of energy;
there, a season is eight hours long and the seasons cycle every day, not every year. Due dates
for taxes signal the beginning of a flood of dollars into municipal, state, and federal
treasuries; there, the season might be one year long (personal income taxes), six months
(property taxes in many states), quarterly (many corporate taxes), and so on.

A2 a) Parametric tests are those that make assumptions about the parameters of the population
distribution from which the sample is drawn. This is often the assumption that the population data
are normally distributed. Non-parametric tests are “distribution-free” and, as such, can be used for
non-Normal variables.

A2 b) As noted before, the Wilcoxon signed-rank test makes the assumption that the distribution of
differences between the two samples is symmetric. This assumption is important as it allows us to
convert the original nonparametric problem into one that can be addressed by a parametric test.

A2 c) Wilcoxon rank-sum test is used to compare two independent samples, while Wilcoxon signed-
rank test is used to compare two related samples, matched samples, or to conduct a paired
difference test of repeated measurements on a single sample to assess whether their population
mean ranks differ.

d) α=0.05

e)

A4) Non-parametric tests are experiments that do not require the underlying population for
assumptions. It does not rely on any data referring to any particular parametric group of probability
distributions. Non-parametric methods are also called distribution-free tests since they do not have
any underlying population
b) Below are the most common tests and their corresponding parametric counterparts:

 Mann-Whitney U Test. The Mann-Whitney U Test is a nonparametric version of the

independent samples t-test. ...
 Wilcoxon Signed Rank Test. ...
 The Kruskal-Wallis Test.

c)To summarize, non-parametric tests can be applied to situations when: The data does
not follow any probability distribution. The data constitutes of ordinal values or ranks.
There are outliers in the data.

d) runs test- A runs test is a statistical analysis that helps determine the randomness of
data by revealing any variables that might affect data patterns. Technical traders can
use a runs test to analyze statistical trends and help spot profitable trading opportunities.

A5 a) Distinguish between 1 tailed and 2 tailed tests. The main difference between one-tailed and
two-tailed tests is that one-tailed tests will only have one critical region whereas two-tailed tests
will have two critical regions. If we require a 100(1−α) 100 ( 1 − α ) % confidence interval we have to
make some adjustments when using a two-tailed test.

Difference Between One-tailed and Two-

tailed Test
Last updated on February 10, 2018 by Surbhi S

The two ways of carrying out statistical significance test of a characteristic, drawn from the
population, with respect to the test statistic, are a one-tailed test and two-tailed test. The one-
tailed test refers to a test of null hypothesis, in which the alternative hypothesis is articulated
directionally. Here, the critical region lies only on one tail. However, if the alternative
hypothesis is not exhibited directionally, then it is known as the two-tailed test of the null
hypothesis., wherein the critical region is one both the tails.

To test the hypothesis, test statistics is required, which follows a known distribution. In a test,
there are two divisions of the probability density curve, i.e. region of acceptance and region
of rejection. the region of rejection is called as a critical region.
In the field of research and experiments, it pays to know the difference between one-tailed
and two-tailed tests, as they are quite commonly used in the process

1. b) Step 1: State your null and alternate hypothesis. ...

2. Step 2: Collect data. ...
3. Step 3: Perform a statistical test. ...
4. Step 4: Decide whether to reject or fail to reject your null hypothesis. ...
5. Step 5: Present your findings.