Moving Averages (Edexcel GCSE Statistics): Revision Note

Moving Averages

What are moving averages?

• A moving average is the average of a number of successive observations

  • This makes it easier to spot trends in data that varies cyclically or seasonally

• The number of data points included in each average must cover one complete cycle

  • Usually this will mean one complete year

• A four-point moving average is the most common moving average

  • e.g. for a year divided into four quarters or into four seasons

• To calculate moving averages

  • e.g. for a four-point moving average with 8 data points

    • the first moving average is the mean of the first four data points

    • the second moving average is the mean of the 2nd through 5th data points

    • the third moving average is the mean of the 3rd through 6th data points

    • the fourth moving average is the mean of the 4th through 7th data points

    • the fifth (and last) moving average is the mean of the 5th through 8th data points

  • Note that the group of data points for each moving average overlaps the group before and after it

  • Stop when you can no longer get a ‘full group’ for the next average

    • e.g. four points for a four-point moving average

How do I plot moving averages on a time series graph?

• It is useful to plot moving averages onto a time series graph

  • This makes it easier to draw accurate trend lines

• Each moving average should be plotted at the midpoint of the time intervals it covers

  • e.g. for a four-point moving average

    • the average for the first 4 points will be plotted halfway between the 2nd and 3rd points

    • the average for the 2nd through 5th points will be plotted halfway between the 3rd and 4th points

    • etc.

• You should not join up the points for moving averages