Fourier Analysis

AAA

DEFINITION of 'Fourier Analysis'

A type of mathematical analysis that attempts to identify patterns or cycles in a time series data set which has already been normalized. By first removing any effects of trends or other complicating factors from the data set, the effects of periodic cycles or patterns can be identified more accurately, leaving the analyst with a good estimate of the direction that the data under analysis will take in the future. Named after the nineteenth-century French mathematician and physicist Joseph Fourier.

INVESTOPEDIA EXPLAINS 'Fourier Analysis'

This type of analysis may sound complex, but it actually makes good sense. For example, suppose a manufacturing company wanted to know what stage of its price cycle its main raw material was in. Because inflation would constantly be increasing the dollar price of the commodity over time, an analyst would remove the effects of inflation from the commodity's historical prices first. Once inflation was controlled for, the analyst would then have a much more accurate picture of the price cycles experienced by the commodity.

RELATED TERMS
  1. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  2. Econometrics

    The application of statistical and mathematical theories to economics ...
  3. Cyclical Industry

    A type of an industry that is sensitive to the business cycle, ...
  4. Forecasting

    The use of historic data to determine the direction of future ...
  5. Inflation

    The rate at which the general level of prices for goods and services ...
  6. Detrend

    In forecasting models, the process of removing the effects of ...
Related Articles
  1. Capitalizing On Seasonal Effects
    Active Trading Fundamentals

    Capitalizing On Seasonal Effects

  2. Market Cycles: The Key To Maximum Returns
    Active Trading

    Market Cycles: The Key To Maximum Returns

  3. DMI Points The Way To Profits
    Active Trading Fundamentals

    DMI Points The Way To Profits

  4. Lognormal and Normal Distribution
    Fundamental Analysis

    Lognormal and Normal Distribution

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center