# Smoothing, Baselines, and Naive Forecasts

`D00-F10-A09` · Financial Mathematics, Statistics, and Data Foundations → Financial Time-Series Foundations · archetype `record-transform` · difficulty 1/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/foundations/financial-time-series-foundations/smoothing-baselines-and-naive-forecasts/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { smoothingBaselinesAndNaiveForecasts } from "fintech-algorithms/foundations/financial-time-series-foundations/smoothing-baselines-and-naive-forecasts";
```

## Signature

```ts
smoothingBaselinesAndNaiveForecasts(input)
```

Runs simple exponential smoothing over the series and reports both the naive last-value forecast and the smoothed one.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `input` | `D00Input` | yes | Reads `values`, a non-empty list of finite numbers, `timestamps` of the same length, and `alpha`, the weight placed on the newest observation. |

## Returns

`D00Output`

`smoothed` is the same length as the input and starts at its first value. `naiveNext` is the last observed level and `smoothedNext` the last smoothed one.

## Errors

- When `values` is absent, empty, or holds a non-finite number — throws RangeError
- When `timestamps` and `values` have different lengths — throws RangeError
- When the series holds fewer than two observations — throws RangeError
- When `alpha` is outside the closed interval from zero to one — throws RangeError

## Complexity

Time `O(n^2)`, space `O(n)`.

## Worked example

This is the worked example published in the article, replayed by the test suite on every run. The output cannot drift.

### Input

`input`:

```json
{
  "timestamps": [
    "2025-01-01T00:00:00Z",
    "2025-01-02T00:00:00Z",
    "2025-01-03T00:00:00Z",
    "2025-01-04T00:00:00Z",
    "2025-01-05T00:00:00Z",
    "2025-01-06T00:00:00Z"
  ],
  "values": [100, 102, 101, 104, 106, 105],
  "lag": 1,
  "window": 3,
  "resampleSize": 2,
  "period": 3,
  "stationarityTolerance": 3,
  "alpha": 0.4,
  "splitIndex": 4
}
```

### Call

```ts
smoothingBaselinesAndNaiveForecasts(input)
```

### Returns

object with 2 fields: smoothed, naiveNext

```json
{
  "smoothed": [
    100,
    100.80000000000001,
    100.88000000000001,
    102.12800000000001,
    103.67680000000001,
    104.20608000000001
  ],
  "naiveNext": 105
}
```

## Verification and provenance

Tier: **verified** (via input-expected).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.0.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/foundations/financial-time-series-foundations/smoothing-baselines-and-naive-forecasts/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/foundations/financial-time-series-foundations/smoothing-baselines-and-naive-forecasts/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/foundations/llms.txt