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MLS-C01 Exploratory Data Analysis Practice Question

A data scientist is performing EDA on a time-series dataset and observes a strong upward trend and seasonal patterns. The scientist needs to make the data stationary for modeling. Which transformation should be applied?

Answer choices

Why each option matters

Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.

Correct answer & explanation

Apply differencing to the series

Differencing is a technique that removes trends and seasonality by subtracting the previous observation from the current one, making the time series stationary. One-hot encoding (A) is used for categorical variables. PCA (B) reduces dimensionality but does not address stationarity. Min-max scaling (C) normalizes the range of data but does not remove trend or seasonality. Logarithmic transformation (E) stabilizes variance but does not eliminate trends. Therefore, differencing (D) is the correct choice.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

  • Apply one-hot encoding

    Why it's wrong here

    One-hot encoding is for categorical features, not time series.

  • Apply PCA

    Why it's wrong here

    PCA is for dimensionality reduction, not stationarity.

  • Apply min-max scaling

    Why it's wrong here

    Scaling does not address non-stationarity.

  • Apply differencing to the series

    Why this is correct

    Differencing removes trends and seasonality, making the series stationary.

  • Apply logarithmic transformation

    Why it's wrong here

    Log transformation stabilizes variance but does not remove trends.

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