Arima
Arima
For example:
On the other hand, non-stationary data (like a changing price) means the rules of the
pricing are inconsistent. The model will struggle to predict the future because it's not
clear how the past influences the future.
In short, stationarity ensures that patterns in the data are stable enough for ARIMA to
work effectively in predicting future values.
Step-by-Step ARIMA Modeling
Step 1: Check for Stationarity
If the series is non-stationary, apply differencing (subtract the previous value from the
current value).
Step-by-Step ARIMA Modeling
Step 2: Identify ARIMA (p, d, q) Parameters
Once you identify p, d, q, use statsmodels in Python to build the ARIMA model.
Check metrics like Mean Squared Error (MSE), AIC, and BIC to find the best model.
● [10, 12, 15, 18, 17, 20, 22, 23, 25, 30]
● [1, 5, 10, 12, 20, 22, 30, 35, 40, 50]
● [3, 6, 9, 12, 17, 22, 28, 35, 41, 50]
Example: Real-Life Applications of ARIMA
ARIMA is widely used for: