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

Projecting values from predictor variables

As we saw in the previous section, the first task when building a predictor model is to test whether the predictor variables have a close relationship with the result variable. In this section, we will learn the introductory concepts of statistical tests for relationships between variables. Linear model accuracy is represented by the concepts displayed in Figure 2.6:

Figure 2.6 – Elements involved in calculating the model confidence

The visual elements of the statistical methods to measure the variables' relationships are as follows:

  • The sales average is the horizontal line near 15 on the y axis.
  • The linear model is shown by the diagonal line. This line predicts the future values.
  • Unexplained variation (the SSE) is the distance between the expected value and the linear model.
  • Explained variation (the sum of squares regression (SSR)) is the distance from the linear model to the average...