I have finance data that I need to forecast out for 7 years. My data is generally debits and credits, and those are split into a number of sub-series which share common traits (e.g. similar seasonality and/or trend).
My question is, is it appropriate to
- split the total series into component parts;
- forecast each part in the most appropriate manner;
- re-aggregate the parts into a complete projection?
For example, I'd like to treat the following sub-series/parts differently:
Expenditures
- Wages/Pension (annual percent increase, based upon contracts)
- Insurance (annual percent increase based upon prior increases)
- Supplies (annual percent increase based upon different prior increases)
Then, add the individual sub-series back into a single forecast. Obviously, there would be similar but different sub-series/parts for revenue, which would eventually be combined for a total forecast.
