Data Analysis with Microsoft Excel: Updated for Office 2007

Chapter 11 Times Series 439

To create a scatterplot of temperature versus one-year lagged

temperatures:

1 Select the range D1:E129.

2 Click the Scatter button from Charts group on the Insert tab and then

select the fi rst chart subtype (Scatter).

3 Move the chart to the Lag 1 Chart chart sheet.

4 Remove the gridlines and legends from the plot. Name the chart title

Lagged Temperatures, the x axis title Prior Year Temperature (F),

and the y-axis title Temperature (F). See Figure 11-6.

Figure 11-6
Temperature

and Lag1

temperature

values

As shown in the chart, there is a strong positive relationship between tem-

perature value in one year and the temperature value from the previous year.

This means that a high temperature value in one year implies a high (or above

average) value in the following year; a low value in one year indicates a low

(or below average) value in the next year. In time series analysis, we study the

correlations among observations, and these relationships are sometimes help-

ful in predicting future observations. In this example, the annual temperature

value appears to be strongly correlated with the temperature value from the

previous year. Temperatures might also be correlated with observations two,