| Definition
of Terms Although a number of
technical terms may be used in this website
don't let the long words scare you.
Below are easy to understand definitions of common phrases or words.
Correlation Coefficient--A correlation
coefficient is a one number measure of how well something which is being predicted
"fits" the underlying assumptions used to predict it. Or
it can be
thought of as how strong the relationship is between the number being predicted and the
numbers and relationships used to predict it. The correlation coefficient ranges
from 0 to 1. A correlation coefficient of 0 means there is no relationship and 1
means there is a perfect relationship. For purposes of comparison
correlation
coefficients in the 0.4 to 0.6 range are considered good in psychology and the social
sciences
where coefficients in the 0.8 to 0.98 range are considered good in the physical
sciences and engineering. In other words
the closer the number is to one
the
better.
Model--A model is a symbolic
representation of how something behaves
or it is a description of causes and
effects. An example may be to say that interest rates rise when more people want to
burrow money. And then from this simple idea
or model
interest rates are related
to demand for money using a bunch of fancy math and numbers.
Standard Deviation--This is a term
from statistics which is a measure of how much a number can expect to jump around the
average due to unexplained or
dare we say
random events.
For instance
if the average is 10 and the standard deviation is 1 then more than half of
the measurements are expected to fall within the range of 9 to 11. It actually works
out that over 99% of all points should fall within plus or minus three times the standard
deviation. This means almost all measurements should fall between 7 and 13 in the
example above. Below is a chart showing the chance of a data point falling within so
many standard deviations of the predicted value:
+/- 1 Standard
Deviation 68.3%
+/- 2 Standard Deviations 95.4%
+/- 3 Standard Deviations 99.7%
NSA-Not Seasonally Adjusted. No
adjustments are made to the numbers because of seasonality
or cycling within the year.
SA-Seasonally Adjusted. The
numbers are adjusted based on seasonality
or cycling
within the year.
SAAR-Seasonally Adjusted Annualized
Rate. The numbers are adjusted for seasonality and then given at a yearly rate. |