## How do you interpret unit roots?

In general, a p-value of less than 5% means you can reject the null hypothesis that there is a unit root. You can also compare the calculated DF_T statistic with a tabulated critical value. If the DF_T statistic is more negative than the table value, reject the null hypothesis of a unit root.

## What is the difference between DF and ADF test?

Similar to the original Dickey-Fuller test, the augmented Dickey-Fuller test is one that tests for a unit root in a time series sample. The primary differentiator between the two tests is that the ADF is utilized for a larger and more complicated set of time series models.

**What does the Dickey-Fuller test for?**

In statistics, the Dickey–Fuller test tests the null hypothesis that a unit root is present in an autoregressive time series model. The alternative hypothesis is different depending on which version of the test is used, but is usually stationarity or trend-stationarity.

### Why do we check stationarity of data?

Stationarity is an important concept in time series analysis. Stationarity means that the statistical properties of a a time series (or rather the process generating it) do not change over time. Stationarity is important because many useful analytical tools and statistical tests and models rely on it.

### What are Dickey-Fuller DF and augmented DF tests?

In statistics and econometrics, an augmented Dickey–Fuller test (ADF) tests the null hypothesis that a unit root is present in a time series sample. It is an augmented version of the Dickey–Fuller test for a larger and more complicated set of time series models.

**How do you interpret the results of Augmented Dickey Fuller test?**

Augmented Dickey-Fuller test

- p-value > 0.05: Fail to reject the null hypothesis (H0), the data has a unit root and is non-stationary.
- p-value <= 0.05: Reject the null hypothesis (H0), the data does not have a unit root and is stationary.

#### Why is the ADF test preferred to the DF test?

The ADF test can handle more complex models than the Dickey-Fuller test, and it is also more powerful. That said, it should be used with caution because—like most unit root tests—it has a relatively high Type I error rate.

#### What is Dickey Fuller DF augmented DF test?

**How do you know if data is stationary?**

Checks for Stationarity

- Look at Plots: You can review a time series plot of your data and visually check if there are any obvious trends or seasonality.
- Summary Statistics: You can review the summary statistics for your data for seasons or random partitions and check for obvious or significant differences.

## How do you know if a variable is stationary?

Probably the simplest way to check for stationarity is to split your total timeseries into 2, 4, or 10 (say N) sections (the more the better), and compute the mean and variance within each section. If there is an obvious trend in either the mean or variance over the N sections, then your series is not stationary.