Detrend

Detrend

In forecasting models, the process of removing the effects of accumulating data sets from a trend to show only the absolute changes in values and to allow potential cyclical patterns to be identified. This is done using regression and other statistical techniques.

Notes:

Different charting services include the use of a detrend price oscillator, which gives a trader a method for analyzing shorter term cyclical patterns. These patterns can then be used to more effectively identify major turning points in the longer term cycle.

See also: Business Cycle, Consumer Confidence Index - CCI, Coincident Indicator, Expectations Index, Lagging Indicator, Leading Indicator, Regression

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Detrend

To remove the general drift, tendency, or bent of a set of statistical data as related to time. Often accomplished by regressing a variable or a time index and perhaps the square of the time index and capturing the residuals. A stochastic detrend would be to subtract a moving-average (say for five years) from the value of the variable.