Predictive analytics: decisions with visible uncertainty
A forecast estimates an outcome from data and assumptions; it does not describe the future with certainty. Its value depends on improving a specific decision and comparing error with a useful baseline.
Ian · 2026-05-17
Practical guide
Predictive analytics: decisions with visible uncertainty
A forecast estimates an outcome from data and assumptions; it does not describe the future with certainty. Its value depends on improving a specific decision and comparing error with a useful baseline.
Planning a first application
- Define the horizon, frequency and supported decision.
- Separate training and test data in time order.
- Compare with a simple forecast and review bias and missing data.
What to check before deciding
Measure out-of-sample error, stability and effect on decisions. Market changes can reduce the relevance of historical data. Present ranges or scenarios where appropriate and review the model when conditions change.
Primary reference: Hyndman & Athanasopoulos · Evaluating forecast accuracy
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