Example of Autocorrelation

The manager of a shipping yard wants to study the amount of cargo that is transported. The manager uses the autocorrelation function to determine which terms to include in an ARIMA model.

  1. Open the sample data, Shipping.MTW.
  2. Choose Stat > Time Series > Autocorrelation.
  3. In Series, enter Weight.
  4. Click OK.

Interpret the results

The graph shows a significant spike at lag one that slowly decreases after a few lags. This result indicates that the manager should include an autoregressive term in the ARIMA model. The managers should also use the partial autocorrelation function to determine the order of the autoregressive term.
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