As the name ‘time series forecasting’ suggests, it involves working
on time (years, days, hours, minutes) based data, to derive hidden
insights to make informed decision making.
Importance of Time Series
Analysis
Time series models are very useful models when you have serially
correlated data as shown above. Most businesses work on time series data
to analyze
Sales numbers for the next year
Website Traffic
Competition Position
Demand of products
Stock Market Analysis
Census Analysis
Budgetary Analysis
This is just the tip of the iceberg and there are numerous prediction
problems that involve a time component and concepts of time series
analysis come into picture.
Why is Time Series
Forecasting Challenging?
But what makes a time series more challenging than say a regular
regression problem? There are 2 things:
Time Dependence of a time series - The basic
assumption of a linear regression model that the observations are
independent doesn’t hold in this case.
Seasonality in a time series - Along with an
increasing or decreasing trend, most time series have some form of
seasonal trends, i.e. variations specific to a particular time
frame.