fit a straight line trend by the method least squares to the following data and also predict the earning for the year 2013,
years: 2005,2006,2007,2008,2009,2010,2011,2012
earning :38,40,65,75,69,60,87,95
in lakhs
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During Time Series analysis we come across with variables, many of them are dependent upon others. It is often required to find a relationship between two or more variables. Least Square is the method for finding the best fit of a set of data points. It minimizes the sum of the residuals of points from the plotted curve. It gives the trend line of best fit to a time series data. This method is most widely used in time series analysis. Let us discuss the Method of Least Squares in detail.
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