Electricity Notes

“Transformations such as logarithms can help to stabilize the variance of a time series. Differencing can help stabilize the mean of a time series by removing changes in the level of a time series.”

Transformations such as logarithms help stabilize the variance of a time series by reducing heteroscedasticity, while differencing removes trends and level shifts to stabilize the mean. Applying both transformation and differencing yields a series with approximately constant mean and variance.