Excel TREND function and other ways to do trend analysis

This tutorial demonstrates how to calculate trends in Excel using the TREND function, create trendlines on charts, and explore alternative methods. In today's rapidly evolving technological, market, and customer landscapes, understanding trends is crucial. Trend analysis helps identify patterns in past and present data to predict future behavior.

- Excel TREND function syntax

• Using the TREND function: formula examples
  • Trendline analysis using historical data
  • Projecting future trends
  • Trend formulas with multiple x-value sets
• Alternative trend analysis methods in Excel
  • FORECAST vs. TREND
  • Trendline charts and equations
  • Moving averages

The Excel TREND Function

The TREND function calculates a linear trendline through a set of dependent y-values and optional independent x-values, returning values along this line. It can also project the trendline into the future, predicting y-values for new x-values.

The TREND function's syntax is:

TREND(known_y's, [known_x's], [new_x's], [const])

Where:

• known_y's (required): Your known dependent y-values.
• known_x's (optional): One or more sets of independent x-values. If omitted, it defaults to {1,2,3,...}. Rules for dimensions apply depending on the number of x-value sets.
• new_x's (optional): New x-values for trend projection. Must have the same dimensions as known_x's if provided. If omitted, it equals known_x's.
• const (optional): A logical value (TRUE/FALSE) determining how the constant 'a' in the equation y = bx a is calculated. TRUE (or omitted) calculates 'a' normally; FALSE forces 'a' to 0.

TREND Function and Linear Trendline Calculation

The TREND function uses the least squares method to find the best-fitting line. The equation is:

For one x-value set: y = bx a

For multiple x-value sets: y = b₁x₁ b₂x₂ … b_nx_n a

Where:

• y is the dependent variable.
• x is the independent variable.
• a is the y-intercept.
• b is the slope.

This is the same equation used by the LINEST function and linear regression.

TREND as an Array Formula

To return multiple new y-values, use TREND as an array formula (select the output range, enter the formula, and press Ctrl Shift Enter). The resulting curly braces {} indicate an array formula. Individual cells within the array cannot be edited.

Excel TREND Formula Examples

Let's illustrate with examples.

Time Series Trend Analysis with TREND

Assume you have month numbers (x-values) in A2:A13 and sales figures (y-values) in B2:B13. To find the overall trend:

Select C2:C13, enter =TREND(B2:B13,A2:A13), and press Ctrl Shift Enter. Create a line chart using B1:C13 to visualize the trendline.

Projecting Future Trends

Extend the time series with new month numbers (A14:A17) and project the trend using:

=TREND(B2:B13,A2:A13,A14:A17)

(Enter in C14:C17, Ctrl Shift Enter). Create a chart with B1:C17.

Multiple X-Value Sets

With known_x¹ in B2:B13, known_x² in C2:C13, and known_y in D2:D13, the trend is:

=TREND(D2:D13,B2:C13)

Projecting with new_x¹ in B14:B17 and new_x² in C14:C17:

=TREND(D2:D13,B2:C13,B14:C17)

Alternative Trend Analysis Methods

While TREND is popular, other methods exist.

FORECAST vs. TREND

While similar, "trend" describes past/present data, while "forecast" predicts the future. In Excel, TREND can do both, but FORECAST only predicts future values. FORECAST is a regular formula (single output), while TREND is an array formula (multiple outputs). For linear time series, they produce identical results.

Compare: =TREND(B2:B13,A2:A13,A14:A17) and =FORECAST(A14,$B$2:$B$13,$A$2:$A$13)

Trendlines on Charts

Add a trendline to a chart by right-clicking the data series, selecting "Add Trendline...", and choosing a type. The "Format Trendline" pane allows forecasting and displaying the equation.

Moving Averages

Moving averages smooth short-term fluctuations to highlight longer-term trends. Add a moving average trendline on a chart via the "Add Trendline..." option.

This tutorial covers using the TREND function for trend analysis in Excel. For a closer look at the examples, download the sample workbook.

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