Book Image

Data Forecasting and Segmentation Using Microsoft Excel

By : Fernando Roque
Book Image

Data Forecasting and Segmentation Using Microsoft Excel

By: Fernando Roque

Overview of this book

Data Forecasting and Segmentation Using Microsoft Excel guides you through basic statistics to test whether your data can be used to perform regression predictions and time series forecasts. The exercises covered in this book use real-life data from Kaggle, such as demand for seasonal air tickets and credit card fraud detection. You’ll learn how to apply the grouping K-means algorithm, which helps you find segments of your data that are impossible to see with other analyses, such as business intelligence (BI) and pivot analysis. By analyzing groups returned by K-means, you’ll be able to detect outliers that could indicate possible fraud or a bad function in network packets. By the end of this Microsoft Excel book, you’ll be able to use the classification algorithm to group data with different variables. You’ll also be able to train linear and time series models to perform predictions and forecasts based on past data.
Table of Contents (19 chapters)
1
Part 1 – An Introduction to Machine Learning Functions
5
Part 2 – Grouping Data to Find Segments and Outliers
10
Part 3 – Simple and Multiple Linear Regression Analysis
14
Part 4 – Predicting Values with Time Series

Calculating t-statistics and p-values

In this section, we will apply our knowledge of how to ascertain whether the variables have a strong relationship to predict new values with a regression model. The complexity, in this case, is that we are not working with just one predictive variable. Now, we are working with two or more variables in a multiple linear regression model.

The statistical probes to determine the significance of the relationship are as follows:

  • Determination coefficient
  • Correlation coefficient
  • t-statistics
  • p-value

To find the coefficients, we have to review the distances between the average of the expected values and the linear model.

Figure 10.8 – 3D chart distances; linear model to expected results

Figure 10.8 is the 3D chart of the variations we saw in the previous chapter. The errors or unexplained variations (sum of squares errors (SSEs)) are the distance between the expected values and the linear...