What Is a Time Series and How Is It Used?
Time-series data is a type of data that organizations rely on to track trends and make predictions over specific periods. It is characterized by its chronological order, allowing businesses to uncover underlying patterns, observe changes over time, and forecast future events. With the right tools, your organization can use time-series data to bring substantial business value by allowing for more informed decision-making and strategic planning.
Time series plays a crucial role in various fields, including marketing, supply chain management, health care, cryptocurrency, and finance. In this article, we’ll take a look at what time-series data is, how to analyze it, and the common tools available to understand how time-series data can be a powerful asset for your business and the best practices for leveraging it effectively.
What Is Time-Series Data?
Time-series data or temporal data is a sequence of data points collected over regular or irregular time intervals that can track changes over time (in milliseconds, days, months, or even years), providing valuable insights into trends, patterns, and relationships.
You can think of time-series data as a collection of data points or snapshots taken at specific moments, capturing the state of a system at a particular point in time. When you collect these data points over time, you can observe how the system evolves, revealing patterns and trends.
Why time-series data and analysis are used
No matter the type, having access to detailed, feature-rich time-series data has become one of the most valuable commodities in our information-hungry world. Businesses, governments, schools, and communities, large and small, are finding invaluable ways to mine value from analyzing time-series data.
Time-series data is essential for tracking changes in a variable over time. By monitoring the progress of numerical indicators, organizations can use historical data trends to support their decision-making process. This form of data allows businesses to identify patterns, understand past behaviors, and predict future outcomes.
As we’ll see in our examples, time-series data can reveal all sorts of valuable business information, including trends in performance and growth. By leveraging these insights, companies can make data-driven decisions that enhance their strategies and drive growth.
Types of Time-Series Analysis
Time-series analysis can help organizations understand and utilize their data effectively and can be categorized into the following distinct types:
Exploratory
Exploratory analysis involves decomposing the data into irregularities, seasonality, cyclicity, and trend to understand it qualitatively. By decomposing the series, we can understand what we’re seeing and why we’re seeing it.
Curve fitting
Curve fitting involves creating functions that match the data points in a time series using regression models. This technique helps identify the relationship between variables and forms a mathematical model that represents the data's behavior.
Forecasting
Forecasting uses regressed functions to estimate the future behavior of a time series. By projecting trends and patterns into the future, organizations can make informed predictions and plan accordingly.
Classification
This method involves creating descriptive classes for time-series data, such as “increasing,” “cyclical,” or “stable.” Classification helps in categorizing time series based on an outcome variable, making it easier to analyze and interpret different types of data, including new or unseen data. For instance, you can categorize server performance as “normal” or “irregular” based on the CPU usage data you’ve collected over time.
Different Types of Time-Series Data
Time-series data can take on various forms depending on the nature of the observations. The two main types of time-series data are continuous and discrete.
Continuous time-series data
Continuous time-series data is collected continuously over time without any interruption. Examples include temperature measurements recorded every hour or stock prices updated every second. Within the realm of continuous time-series data, there are various subtypes that can be further explored. For example, periodic time-series data refers to data that exhibits repeating patterns over a fixed interval, such as daily temperature fluctuations or weekly website traffic.
Discrete time-series data
Discrete time-series data is collected and recorded at specific time intervals. For instance, a monthly sales report or annual GDP growth rate are forms of discrete time-series data.
On the other hand, irregular time-series data does not follow a specific pattern and may have random fluctuations or anomalies. Event data, for example, can be considered irregular time-series data: it refers to records of events that occur at specific points in time, often without a predictable pattern. This results in timestamps that do not follow a regular interval, making it irregular. Examples include user actions on a website, sensor alerts, or transaction logs. Each event is recorded when it happens, creating a time series with varying intervals between data points.
Discrete time-series data can also be categorized into different subtypes based on the time intervals at which the data is collected. Some examples include daily, weekly, monthly, quarterly, or annual data. Each type of discrete time-series data has its own unique characteristics and may require different analytical approaches.
The 4 Components of Time-Series Data
Time-series data involves the following four components:
- Trend
- Seasonality
- Cyclicity
- Irregularity
Trend
Trend refers to the general direction or long-term movement of data and whether it’s decreasing, increasing, or unchanged over a period of time. It reveals overall decline or growth over a certain time period. For instance, if you analyze e-commerce sales over the last few years, you’ll notice an upward trend.
Seasonality
Seasonality refers to regular periodic occurrences within a smaller time interval, like spikes in product sales during the holiday season. Seasonal data exhibits fluctuations fixed in magnitude, direction, and timing. For instance, a person’s step count might be higher in autumn and spring since it’s too hot for long walks in the summer and too cold in winter.
Cyclicity
Cyclicity refers to repeated fluctuations that don’t have a fixed period, don’t last long enough to be considered trends (but are longer than irregularities), and don’t have consistent durations or amplitudes. Examples of cyclicity include economic recessions.
Irregularity
Irregularity encompasses short-term irregular fluctuations, noise, or residual variability in data that other components can’t explain. It includes unpredictable and erratic deviations after accounting for cyclicity, seasonality, and trends. An example of irregularity includes a gap in the pedometer sampling.
Examples of Time-Series Data
Let’s take a look at some real examples of time-series data to understand its value across different domains:
Financial markets
In financial markets, the candlestick chart is a common tool for tracking an asset's price movement over time. Each bar in this chart represents four key values: the opening price, closing price, high price, and low price for a given period. This kind of analysis reveals important patterns and price trends for assets, helping investors and traders make informed decisions.
Blockchain data
Blockchain technology inherently involves a lot of time-series data, as each blockchain functions as a time-series database. For example, in the Bitcoin network, tracking mining fees and block rewards over time can provide insights into the economics of Bitcoin mining and the factors that influence mining revenue.
Another example is the gas prices on the Ethereum network. Gas refers to the blockchain transaction fee paid to network validators, which is essential for the network to function properly. Monitoring gas prices over time is essential for understanding how they fluctuate and the factors that influence these changes.
Sensors and Internet of Things (IoT) data
Sensor data is extensively used in manufacturing and industrial settings to monitor machinery.
For instance, tracking temperature inside and outside a room over time can help you understand temperature changes over time and take necessary action if temperatures reach critical levels.
Another example of time-series data in this domain is the vibration levels of machines in a factory. This data is important for assessing the health of the machines and identifying potential issues before they become major problems, ensuring efficient and uninterrupted operations.
Sports data
In sports, time-series data can be used to analyze player and team performance.
For example, in American football, tracking a player’s position at the beginning of the game and how they move on the field throughout allows for detailed performance analysis. This helps in understanding strategies, player efficiency, and overall team dynamics.
Another application is calculating the average yards run by a player in a game, which provides insights into their performance and contribution to the team.
Collecting Time-Series Data
Now that we have a better understanding of time-series data, let's move on to the process of collecting this valuable information. There are various tools and techniques available to collect time-series data, depending on the nature of the data source and the level of precision required.
One common tool used for collecting time-series data is sensors or data loggers, which can be installed to record measurements at regular intervals. These measurements can include temperature, humidity, or even stock market data. Sensors are often used in scientific research, where precise and accurate data is crucial for analysis and decision-making.
For example, in climate studies, sensors are deployed to collect data on temperature, rainfall, and wind speed at specific locations. The collected data is then used to analyze weather patterns and make predictions about future climate conditions.
Additionally, online platforms and databases offer APIs (application programming interfaces) for accessing and retrieving time-series data from various sources, such as financial markets or weather stations. These APIs allow developers to integrate real-time data into their applications, enabling users to access up-to-date information.
For instance, financial institutions use APIs to fetch stock market data and display it on their trading platforms. This allows traders to make informed decisions based on the latest market trends and fluctuations.
Best practices in data collection
While collecting time-series data, it is essential to follow certain best practices to ensure data quality and integrity. This includes regular calibration of sensors to maintain their accuracy and reliability. Calibration involves comparing the sensor's readings to a reference standard and adjusting it if necessary.
By calibrating sensors at regular intervals, any drift or inaccuracies in the measurements can be identified and corrected, ensuring the collected data is precise and trustworthy.
Adherence to data privacy and security protocols is also of utmost importance in time-series data collection. Depending on the nature of the data being collected, there may be legal and ethical considerations regarding its handling and storage.
For example, collecting personal health data requires compliance with privacy regulations, such as the Health Insurance Portability and Accountability Act (HIPAA) in the United States. Implementing appropriate security measures, such as encryption and access controls, helps safeguard the collected data from unauthorized access and potential breaches.
Furthermore, it is crucial to establish a clear data collection protocol to ensure consistency and minimize any potential biases in the recorded observations. A well-defined protocol outlines the procedures and guidelines for data collection, including the sampling frequency, data format, and any specific conditions or criteria that need to be met during the data collection process.
Following a standardized protocol ensures that data is collected in a systematic and unbiased manner, enabling accurate analysis and interpretation.
Some time-series databases, like Timescale, comply with crucial security standards, such as SOC2 compliance, ensuring your data is handled and kept securely.
Finally, proper storage and backup of collected data is another critical aspect of data collection. Time-series data can accumulate rapidly, especially when collected at frequent intervals. Therefore, it is important to have a robust data storage system in place.
This can involve using cloud-based storage solutions, like the one offered by Timescale Cloud, our fully managed, cloud-native PostgreSQL++ solution, or dedicated servers to store the data securely (if you’re self-hosting the open-source TimescaleDB, which lives at the heart of Timescale Cloud).
Additionally, implementing a backup strategy ensures that even in the event of hardware failure or data loss, the collected time-series data remains intact and accessible. Timescale allows you to focus on building your applications, not managing your database, saving you time with automatic backups, upgrades, and failover. Read how high availability works in our time-series cloud database.
Common Tools for Time-Series Data
To make the most of your time-series data, you need a robust set of tools for both data infrastructure and data analysis. These tools help you effectively ingest, store, query, and visualize time-series data.
Data infrastructure
- Data ingest tools
Data ingest tools are crucial for collecting data from various sources and feeding it into your database. Depending on the nature of your data sources, you can choose to work with common tools like Apache Kafka or Prometheus or you might have specialized ingest processes for certain hardware or data sources, such as IoT devices, sensors, or proprietary systems.
Ensuring your data infrastructure is flexible enough to handle connections with all sorts of data sources is crucial for scalability and adaptability.
- Database
Choosing the right database is vital for managing time-series data, which can grow rapidly. While you can use general-purpose databases, specialized time-series databases often provide better performance, flexibility, and features tailored to time-series data.
One of the most commonly used general-purpose databases is PostgreSQL—a powerful database system well-known for its performance, reliability, and robustness. It supports advanced data types and performance optimization techniques, making it a popular choice for a wide range of applications.
But since time-series data can scale up quickly, you need a specialized tool like Timescale. TimescaleDB is a time-series database optimized for complex queries, built on top of PostgreSQL. It provides the scalability, reliability, and SQL querying capabilities of PostgreSQL, with additional time series-specific optimizations. It can handle high write and query loads typical of time-series data, offering features like automatic partitioning, compression, and real-time analytics.
Analytic tools
- Query tools
Query tools allow engineers and data analysts to interact with the database using languages and interfaces that enable efficient data retrieval and manipulation. SQL is the most common language used for querying databases due to its widespread adoption and versatility.
With the right tools, you can extract the appropriate data and perform computations on them. To make the most out of your data, you should choose tools that can easily interact with commonly used query languages and software.
- Visualization tools
Visualization tools are crucial for transforming raw data into meaningful insights through charts, graphs, and dashboards. Effective data visualization helps analysts and stakeholders understand trends, patterns, and anomalies in time-series data. Examples of software or packages that allow data visualization include Matplotlib and Tableau.
Conclusion
Time-series data is a valuable source of information for organizations. With an understanding of time-series analysis and the right tools, organizations can identify meaningful trends in their data, improve their decision-making process, and optimize their processes.
TimescaleDB, a dedicated time-series database built on PostgreSQL, offers the familiarity and power organizations need to get the most from their time-series data. To learn more about Timescale and time-series data, here are some in-depth articles to check out: