What is Time Series Analysis?

Time has been a significant component for as long as we have been recording data. Time is a crucial data variable in time series analysis. Analysis of the Times series enables us to explore our reality and understand how we advance within it. 

A particular method of examining a set of data points gathered over a period is called a time series analysis. Instead of just capturing the data points arbitrarily, time series analysers record the data points at regular intervals over a predetermined length of time. But this kind of study involves more than just gathering data over time. Data from time series can be analysed to reveal how variables change over time, which distinguishes them from other types of data. To put it another way, time is a key variable since it both reveals how the data changes over the duration of the data points and the outcomes. It offers an additional source of data as well as a predetermined order of data dependencies. 

To maintain consistency and reliability, time series analysis often needs a lot of data. A large data collection guarantees that your analysis can sift through erratic data and that your sample size can represent. Additionally, it guarantees that any trends or patterns are not outliers and can take seasonal variation into consideration. Time series data can also be utilised for forecasting, which is the process of making predictions about the future based on the past. 

Organizations can better comprehend systemic patterns across time by using time series analysis. Business users can examine seasonal trends and learn more about their causes using data visualisations. Organizations can use time series forecasting to estimate the likelihood of future events when they study data at regular intervals. Predictive analytics includes the predicting of time series data. It can indicate expected data changes, such as seasonality or cyclical behaviour, which improves forecasting and gives a better understanding of data factors. 

Non-stationary data—things that change over time or are impacted by time—are studied using time series analysis. Time series analysis is commonly used in sectors like banking, retail, and economics because currency and sales are always fluctuating. When automated trading algorithms are used, stock market analysis is a fantastic illustration of time series analysis in action. Time series analysis is also excellent for predicting weather variations, assisting meteorologists in foreseeing everything from tomorrow’s weather report to upcoming years of climate change.

Written by Sonika Mittal – LCF Intern