I have got a model for forecasting using holt-winters. However the parameters confuse me…
The parameters show that there is no trend or seasonality even though there is definite trend and seasonality in the data, the forecasts also match the pattern of the data so the parameters really do not make sense.
M<-matrix(c("08Q1", "08Q2", "08Q3", "08Q4", "09Q1", "09Q2", "09Q3", "09Q4", "10Q1", "10Q2", "10Q3", "10Q4", "11Q1", "11Q2", "11Q3", "11Q4", "12Q1", "12Q2", "12Q3", "12Q4", "13Q1", "13Q2", "13Q3", "13Q4", "14Q1", "14Q2", "14Q3", 5403.676, 6773.505, 7231.117, 7835.552, 5236.710, 5526.619, 6555.782, 11464.727, 7210.069, 7501.610, 8670.903, 10872.935, 8209.023, 8153.393, 10196.448, 13244.502, 8356.733, 10188.442, 10601.322, 12617.821, 11786.526, 10044.987, 11006.005, 15101.946, 10992.273, 11421.189, 10731.312),ncol=2,byrow=FALSE)
Nu <- M[, length(M[1,])]
Nu <- ts(Nu, deltat=1/4, start = c(8,1))
N<-Nu
HWMb <- ets(N, model = "MAM", damped = FALSE, opt.crit = "lik", ic="aic", lower = c(0.001, 0.001, 0.001, 0.001),
upper = c(0.999, 0.999, 0.999, 0.999), bounds = "admissible", restrict = FALSE)
HWMb
Smoothing parameters:
alpha = 0.0183
beta = 0.0056
gamma = 0.0027
This shows the time series with the forecasts where you can see definite seasonality and trend
Are these parameters normal for holt-winters?
Best Answer
The small values for $\beta$ and $\gamma$ show that the trend and seasonality do not change much over time. They do not tell you that there is no trend or seasonality.