problem 2a6:discuss any observations you have about the ACF function and what mi

Question

problem 2a6:discuss any observations you have about the ACF function and what might it tell you about possible models (does the ACF die off to indicate stationarity?, does it die off quickly to suggest a Moving Average Model? If yes, what order of Moving Average model does it suggest? Does it die of exponentially to suggest an Autoregressive model? Does it die off linearly or not at all to suggest that the data is not stationary? Is there a “seasonal” pattern to the ACF data?)

Explanation / Answer

does the ACF die off to indicate stationarity?, Yes, the ACF does die off after lag 20. So it does indicate stationarity.

does it die off quickly to suggest a Moving Average Model - No, the ACF does not die off quickly. So it does not suggest a Moving Average Model (For an MA process of order the ACF truncates after lag q).

Does it die off exponentially to suggest an Autoregressive model? - Yes, it die off exponentially to suggest an Autoregressive model. (the ACF of a stationary AR process of order p goes to zero at an exponential rate)            

Does it die off linearly or not at all to suggest that the data is not stationary? – No, it does not die off linearly but exponentially and suggest that the data is stationary

Is there a “seasonal” pattern to the ACF data? – Yes, there are spikes of ACF after some lags, so the ACF data is showing a seasonal pattern.

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