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Analyzing existing and future data with trendlines

From: Excel 2007: Charts in Depth

Video: Analyzing existing and future data with trendlines

Excel has quite a few different analytical tools, and one that's associated specifically with charts is what we call a trendline. Now you don't have to be a statistical expert to understand regression analysis, or anything like that, although we will get into that territory a bit. If you're trying to analyze the existing data and possibly even trying to make predictions about where the sales might head in the future, right-click on the line chart entry--and you can also do this with column charts as well--and choose Add Trendline, and immediately you'll see a line there. It's called a linear regression line.

Analyzing existing and future data with trendlines

Excel has quite a few different analytical tools, and one that's associated specifically with charts is what we call a trendline. Now you don't have to be a statistical expert to understand regression analysis, or anything like that, although we will get into that territory a bit. If you're trying to analyze the existing data and possibly even trying to make predictions about where the sales might head in the future, right-click on the line chart entry--and you can also do this with column charts as well--and choose Add Trendline, and immediately you'll see a line there. It's called a linear regression line.

Now you probably at this point do need to know a little bit about regression analysis, and we are not going to be talking about that in any depth here. But if you're familiar with the idea of regression, you might choose Exponential. Usually that's a curved line. Associated with this is also an equation, and if you're familiar with why you have an equation, you might want to display that on the char. We see this option down here, Display Equation on Chart. Let me move the dialog box over. There is the equation. Sometimes the R-squared, which is a rough measure of how accurate this might be, and again long explanations as to how that really works, but for those who are familiar with these concepts, the ability to create these quickly and easily has some real merit to it.

I'm just going to choose Linear here. And let me just suggest--and without displaying the other characteristics here at the bottom I'll uncheck those-- you can also, in addition to creating this line, extend it into the future. So I'm going to forward this, using the forward box here, six periods forward, and close. And again if I have the right statistical background and am familiar enough to suggest what has happened here, I can also make a prediction as to where these sales figures might be headed in future months.

Now, one feature here that doesn't require a lot of statistical analysis is a different kind of trendline. So I'll again right-click here. I could keep the current trendline or possibly replace it with another. So maybe we'll right-click on the line here, format the trendline, and along the way here change it to Moving Average. Immediately we see a different line here, and you'll see the number 2, so what actually has happened here in the example? A new line is being created. It starts at the second point. And each point here that we see on this new line is the average of the current entry and the previous one.

So, for example, the one right here for Jun-09, this point right here is the average of the point above and the point for May-09 just to the left here. And the idea behind these is that there are some erratic occurrences in the data here. It bounces up and down a lot. So this line here is more of an average, not exactly an average of everything, but an average of what's happening month to month. You see these sometimes with stock quotes. So I am going to change this to be a three, and each time we do this, as we change this box here, we get a smoother line, and a smoother line, and so on.

So that's going to make some sense, rather than creating a function or a long formula to do the calculation, you don't have to do this. Now those of you who are adept with Excel formulas know that's not exactly difficult. You could easily create the data for this. But the trendline does it much faster, and so creating a Moving Average could be a more popular use of this feature. So this is a feature that has some sophistication to it. On the other hand, a Moving Average a lot more common for a lot of people, easy to get to, different ways to create a trendline in working in Excel. And I did say earlier, it doesn't have to be a line chart. We could easily change this to a column chart here, and it might be appropriate as well, and I will do that right now.

On the Design tab, Change Chart Type, I'll make it a clustered column here to see the data that way. In fact, in this case maybe it sets off the line more readily because we are not looking at two lines, we are looking at a line and a series of columns. So, different uses of the trendline capability with Excel charts.

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This video is part of

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Excel 2007: Charts in Depth

53 video lessons · 9333 viewers

Dennis Taylor
Author

 
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  1. 1m 49s
    1. Welcome
      1m 3s
    2. Using the exercise files
      46s
  2. 22m 7s
    1. Identifying chart elements like plot area, chart area, gridlines, and legends
      5m 3s
    2. Selecting the right chart type
      8m 2s
    3. Understanding chart terminology
      6m 31s
    4. Understanding the Ribbon and the Design, Layout, and Format tabs
      2m 31s
  3. 16m 24s
    1. Selecting data to display as a chart
      6m 17s
    2. Creating charts instantly with shortcuts
      4m 33s
    3. Creating charts with standard menu commands
      2m 24s
    4. Creating presentation-ready charts with just a few adjustments
      3m 10s
  4. 28m 8s
    1. Switching rows and columns for a different view of the data
      3m 9s
    2. Setting a default chart type and creating a template
      3m 47s
    3. Dealing with empty and hidden cells
      4m 18s
    4. Choosing a chart layout
      4m 33s
    5. Choosing a chart style from 48 colorful variations
      3m 34s
    6. Changing the location of a chart
      3m 33s
    7. Moving and resizing a chart
      5m 14s
  5. 11m 25s
    1. Using pictures as chart elements
      3m 55s
    2. Adding shapes and arrows
      3m 37s
    3. Adding floating text and text boxes
      3m 53s
  6. 33m 45s
    1. Adding, editing, and removing chart titles
      3m 15s
    2. Adding horizontal and vertical titles
      3m 56s
    3. Linking titles to content
      2m 32s
    4. Showing numbers of different scales
      4m 38s
    5. Specifying the position of tick marks and axis labels
      2m 41s
    6. Changing the numeric format on labels
      5m 34s
    7. Adding, editing, and removing legends
      3m 19s
    8. Adding and editing data labels
      4m 40s
    9. Showing the source of a chart's data
      3m 10s
  7. 8m 13s
    1. Modifying axis scaling
      3m 50s
    2. Working with gridlines
      4m 23s
  8. 12m 53s
    1. Analyzing existing and future data with trendlines
      4m 2s
    2. Adding drop lines
      3m 14s
    3. Adding high-low lines and up-down bars
      1m 39s
    4. Adding error bars
      3m 58s
  9. 9m 13s
    1. Selecting shape fill and outline
      3m 3s
    2. Adding shape effects
      3m 19s
    3. Applying WordArt styles
      2m 51s
  10. 16m 33s
    1. Formatting lines and borders
      4m 24s
    2. Filling an area with a color gradient
      2m 7s
    3. Specifying line style, color, and weight
      2m 46s
    4. Working with chart text
      3m 40s
    5. Changing the rotation of chart text
      3m 36s
  11. 38m 39s
    1. Using column and bar charts
      7m 24s
    2. Using line charts
      5m 46s
    3. Using pie charts
      8m 37s
    4. Using area, stock, and XY charts
      9m 3s
    5. Using doughnut, bubble, and radar charts
      7m 49s
  12. 10m 55s
    1. Pasting new data into a chart
      2m 58s
    2. Creating charts from multiple data sources
      3m 39s
    3. Adding new data using a table
      4m 18s
  13. 6m 19s
    1. Printing charts
      6m 19s
  14. 19s
    1. Next steps
      19s

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