Suppose you fit a (linear or nonlinear) trend regression to a monthly time series and discover that the R² is only 18 percent. The best conclusion is that: A)adding seasonal factors might make things worse. B)fitting a seasonal component could raise the R². C)there is no seasonality in the time series. D)the overall trend is probably negative.

Question

Quizplus · Accepted Answer

A low value of R² indicates that the trend regression model is not explaining much of the variation in the time series. Adding a seasonal component could improve the model fit and potentially increase the R². Therefore, fitting a seasonal component is a better option than assuming no seasonality in the time series or concluding that the overall trend is negative based solely on the R² value.

Suppose You Fit a (Linear or Nonlinear) Trend Regression to a Monthly