Consider the American Express closing price data in the file S12_16.xlsx. Focus only on the closing prices.
a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think should be used for forecasting? Why?
b. Use Holt’s exponential smoothing to forecast these data, using no holdout period and requesting 20 days of future forecasts. Use the default smoothing constants of 0.1.
c. Repeat part b, optimizing the smoothing constants. Does it make much of an improvement?
d. Repeat parts a and b, this time using a holdout period of 50 days.
e. Write a short report to summarize your results.