American Express Stock: Mean Absolute Deviation
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To determine how well the spans (3 days or 10 days) each forecast the known observations, compute the MAD (mean absolute deviation) for each forecast; see the website referenced above for the MAD formula.
The file P13_16.xlsx contains the daily closing prices of American Express stock for a 1-year period.
a) Using a span of 3 days, forecast the price of this stock for the next trading day with the moving average
method. How well does this method with span 3 forecast the known observations in this data set?
b) Repeat part a with a span of 10.
c) Which of these two spans appears to be more appropriate? Explain your choice.
See attached data file.
Reference Website:
Mathworld. http://mathworld.wolfram.com/MeanAbsoluteDeviation.html
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Solution Summary
Provides steps necessary to forecast the price of a stock.
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