HowtoDoTrendAnalysisinExcel

ThreeMethods:

CreatingtheChart

ApplyingaTrendline

ChoosingtheRightTrendline

Trendanalysisistakingpastdataandusingittoprojectfutureresults.
MicrosoftExcelgivesyoutheabilitytodisplayyourdatainchartformandthen
addoneormoretrendlinestoittoprojecthowthedatamightappearinthe
future.ThefollowingstepsbreakdownhowtodotrendanalysisinExcel2003,
2007,and2010.

Method1of3:CreatingtheChart

EnterthedataintoyourExcelspreadsheet.Youshouldhaveenoughdatato
coverareasonableperiodoftime,suchastwoyearsormore.Youshouldalso

haveconsistentintervals,suchasweekly,monthly,oryearlyentries.
Ifyou'remissingdataforagivenperiodoftime,youcaninterpolatea
reasonableestimatebasedonthefiguresyoudohave.Forexample,ifyou're
missingApril'ssalesfigure,andyouhaveasalesfigureof$200forFebruary,
$250forMarch,$350forMay,and$400forJune,youcanreasonablyconclude
thatApril'ssaleswere$300andenterthatfigure.Likewise,ifyouhavethe
figuresforthepreviousyearandnoticethatthisyear'ssalesrunabout10
percenthigherthanlastyear's,andyouhavelastApril'sfiguresbutnotthis
April's,youcanenterafigureforthisApril10percenthigherthanthefigureyou
haveforlastyear.
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Selectthedatayouwanttoincludeinthechart.Youcanselectthedataeither
byusingyourmouseorbyselectingasinglecellandpressingthe"Ctrl"and"A"

keyssimultaneouslytoselectalladjacentcellswithdatainthem.

AccesstheChartfeature.WhileExceloffersanumberofchartoptions,you'll
wanttosetupalinechartforyourtrendline.
InExcel2003,select"Chart"fromtheInsertmenu.ClicktheStandardTypes
tab,thenchoose"Line"under"Charttype,"andthenclick"Finish."
InExcel2007and2010,clicktheInserttab,thenclickLinedropdownbuttonin
theChartssectionoftheInsertmenuribbon.Selectthelinechartyouwantfrom
theoptionsdisplayed.

Removethechartlegend,ifdesired.Thechartlegendexplainswhichcolors
representwhichdatasetinthechart.Removingthelegendoffersmorespacefor

thechartitself.
ToremovethelegendinExcel2003,clicktheLegendbuttonontheChart

toolbar.
ToremovethelegendinExcel2007or2010,clicktheLegenddropdownbutton
intheLabelsgroupontheLayoutmenuribbonandselect"None."

Method2of3:ApplyingaTrendline

Clickonthechart.Thisdisplaysthemenusormenutabsyouneedtoaccess
Excel'strendlinefeatures.
InExcel2003,thisdisplaystheChartmenu.
InExcel2007and2010,thisdisplaystheDesign,Layout,andFormattabs.

Selectthedataseriesyouwishtohaveatrendlinefor.Thisisnecessaryonly
ifyouhavemorethanonedataseriesonyourchart.
Youcanselectthedataseriesbyclickingitslineinthechart.Excel2007and
2010alsoletyouselecttheseriesfromthedropdownlistatthetopofthe
CurrentSelectionsectionoftheLayoutmenuribbon.
Ifyoudon'tselectaseries,Excelwillpromptyoufortheseriesonceyouchoose
toapplyatrendlinetoyourchart.

Accessthetrendlinefeature.
InExcel2003,selectAddTrendlinefromtheChartmenu.ThisdisplaystheAdd
Trendlinedialog.
InExcel2007and2010,clicktheTrendlinedropdownbuttonintheAnalysis
groupoftheLayoutmenuribbon.

Choosethetypeoftrendlineyouwant.Whattypeoftrendlineyouwant
dependsonhowyouwanttoanalyzeyourdata.See"ChoosingtheRight

Trendline"foradiscussionofthetrendlinetypes.
InExcel2003'sAddTrendlinedialogbox,clicktheTypetaboftheAdd
TrendlinedialogandselectthetrendlinetabfromtheTrend/Regressiontype
list.
InExcel2007and2010,selectthetypeoftrendlinefromtheTrendlinebutton
dropdownlist.Ifyoudon'tseethetypeoftrendlineyouwant,clickMore
TrendlineOptionstoselectitfromtheTrendlineOptionssectionoftheFormat
Trendlinedialog.

Establishtherangeyouwishtoforecastfor.Youcanprojectatrendforward,
backward,orboth.
InExcel2003,clicktheOptionstaboftheAddTrendlinedialogandentera
numberintheForwardfieldoftheForecastsectiontoprojectatrendforward.
(Toprojectatrendbackward,enteranumberintheBackwardfield.)
InExcel2007and2010,selectMoreTrendlineOptionsfromtheTrendline
buttondropdownlisttodisplaytheFormatTrendlinedialogandenteranumber
intheForwardfieldoftheForecastsectiontoprojectatrendforward.

DisplaytheRsquaredvalue,ifdesired.TheRsquaredvalueindicateshow
closelyyourtrendlinefollowsyourdatathecloseritsvalueisto1,thecloserit

followsyourdata.Todisplaythisvalue,checkthe"DisplayRsquaredvalueonchart"
box.
YoucanmovetheRsquaredvaluetoanotherlocationonthechartbyclicking
onittodisplayasetofsizinghandles.Moveyourcursoruntilitchangestoa4
headedarrow,thenholddownyourleftmousebuttonanddragthevaluetoa
newlocation.
Youmaywishtotryseveralofthetrendlinetypesdiscussedbelowtofindwhich
trendlinebestfitsyourdata.

Method3of3:ChoosingtheRightTrendline

Usealineartrendlineforsimpledata.Ifyourdatafitsbestaroundastraightline,
you'llwanttousealineartrendline.Thistrendlinerepresentsasteadyrateof

increaseordecrease.

Usealogarithmictrendlinefordatathatbeginswithasharpchangeand
levelsout.Datasuchasthatforastartupbusinessthatexperiencesaflurryof

initialsalesthatlevelsoffovertimecanbestberepresentedwiththiscurvedline.

Useamovingaveragetrendlineforrapidlyfluctuatingdata.Datathatcycles
upanddown,suchasstockprices,canbestberepresentedwithamoving

averagetrendlinethatsmoothsoutthefluctuationstoshowtheoveralltrend.
Movingaveragetrendlinesrequiresettinganumberofdatapointstobe
averagedsettingtheperiodtotwoaveragesofeachtwosuccessivepoints
(firstandsecond,secondandthird,thirdandfourth,etc.)toproducethepoints
inthetrendline.

Useapolynomialtrendlineforgraduallyfluctuatingdata.Whileamoving
averagetrendlinesuppressesindividualfluctuations,apolynomialtrendlinebrings

themout.Thiscanbeimportantforsuchthingsasanalyzingfuelconsumptionatagiven
speed,whereapeak(orbottom)valueneedstobefound.
Polynomialtrendlinesareclassedaccordingtothemaximumnumberofpeaks
orvalleystheycontain.AnOrder2polynomialtrendlinehasasinglepeakor
bottomvalue,whileanOrder3trendlinecanhavetwosuchvalues,anOrder4
trendlinecanhaveuptothreesuchvalues,andsoon.

Useapowertrendlinewhenworkingwithmeasurementsthatincreaseat
specificrates.Thisworkswithdatasetssuchasthoserepresentingvehicle

acceleration.
Powertrendlinesarevalidonlyfordatasetswhereallvaluesaregreaterthan
zero.

Useanexponentialtrendlinefordatathatrisesorfallsatratesthatincrease
constantly.Thistrendlinecanbeusedwithsuchthingsasradioactivedecay,

whichprogressivelyslowsdownovertime.
Exponentialtrendlinesarevalidonlyfordatasetswhereallvaluesaregreater
thanzero.
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Warnings
Besuretohaveenoughpastdatatomakeameaningfultrendanalysis.
Havinginsufficientdata,orfailingtotakenormalfluctuationsfora
seasonalbusinessintoaccount,mayskewyourresults.Atleasttwo
years'worthofdataisrecommended,longerifyouhaveit.

SourcesandCitations
http://office.microsoft.com/enus/excelhelp/showtrendsandforecast
saleswithchartsHA001087785.aspx
http://support.microsoft.com/kb/828801
http://www.woopid.com/video/1373/AddingTrendLines
Add,change,orremoveatrendlineinachart,"MicrosoftExcel2007
andMicrosoftExcel2010helpfiles,MicrosoftCorporation

ArticleInfo

Categories:MicrosoftExcel
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