So in this lecture, we're going to discuss a somewhat subtle topic.
So students who are new to machine learning can often conflate the concepts of prediction and modeling.
Most beginners to machine learning understand the need to make predictions, but not so much they need
to model.
So what's the difference?
Well, prediction is exactly how it sounds.
It's about making predictions or in other words, trying to guess something which you do not know for
sure.
This makes intuitive sense.
So, for example, we might want to know whether or not someone will click our ad, We want to know
how high or low a stock price will go, or we want to find objects in an image.
These are all examples of making predictions.
But so what does it mean to model?
Modeling gives a functional form to your time series.
This is very important.
Not only does it tell you how to make predictions, but it also gives you deeper insight into why the
Time series is the way it is.
It helps you answer questions about your time series.
For example, you can explain why a Time series is mean reverting, or you can explain why time series
will grow unbounded.
Very importantly, it can also tell you how predictable a Time series is.
Someone who doesn't know how to model might waste their time trying to predict something which is actually
unpredictable.
For example, we all know intuitively that trying to predict a coin flip would not be useful.
Someone who understands how to model will realize that what they have is unpredictable and won't waste
time trying to make better predictions.
In the Field of Time series we might call making Predictions Forecasting.
So time series forecasting is the act of making predictions.
However, modeling would be time series analysis.
In any case, this distinction is not too important for this course, but pay attention to which is
which as we go through the course.
Understand what you are doing and why you are doing it.
Sometimes the goal is to make an accurate forecast, but sometimes the goal is to gain a better understanding
of the data we're working with.
And modeling is one way to help us do this.