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# Chapter 15Time Series Analysis

Islamic finance applies time series analysis to financial data. A time series is a set of observations taken at specific times, usually at equal intervals. Examples of time series are the gross domestic product of a nation observed over a number of years; the price of a stock observed at an interval of five minutes; and the exchange rate of a currency observed each hour, or each day. The interval of time at which a variable is observed is called the frequency of the variable. If the variable is observed very frequently such as every month, day, hour, or five-minutes, it is called high-frequency variable. In contrast, if it is observed at long intervals such as every year or every five years it is called low-frequency variable. Mathematically, a time series is defined by the values of a variable (e.g., closing price of a share, volume of traded shares, gold price) at times Thus, is a variable indexed on time and is represented as: .

A time series involving ...

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