Explain ARIMA model for time series forecasting?
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# Explain ARIMA model for time series forecasting?

This recipe explains ARIMA model for time series forecasting

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## Recipe Objective

The Autoregressive Integrated Moving Average (ARIMA) method models the next step in the sequence as a linear function of the differenced observations and residual errors at prior time steps. It combines both Autoregression (AR) and Moving Average (MA) models as well as a differencing pre-processing step of the sequence to make the sequence stationary, called integration (I). The method is suitable for univariate time series with trend and without seasonal components.

So this recipe is a short example on what is ARIMA modelling of time series forecasting. Let's get started.

## Step 1 - Import the library

``` import numpy as np import pandas as pd from statsmodels.tsa.arima_model import ARIMA ```

Let's pause and look at these imports. Numpy and pandas are general ones. Here statsmodels.tsa.arima_model is used to import ARIMA library for building of model.

## Step 2 - Setup the Data

``` df = pd.read_csv('https://raw.githubusercontent.com/selva86/datasets/master/a10.csv', parse_dates=['date']) df.head() ```

Here, we have used one time series data from github.

## Step 3 - Splitting Data

``` train_data = df[1:len(df)-12] test_data = df[len(df)-12:] ```

Here we have simply split data into size of 12 and rest elements

## Step 4 - Building AR model

``` model = ARIMA(train_data.value, order=(1, 1, 1)) model_fitted = model.fit() ```

The notation for the model involves specifying the order for the AR(p), I(d), and MA(q) models as parameters to an ARIMA function. Here all the parameters are set to be 1.

## Step 5 - Printing the results

``` print('coefficients',model_fitted.params) predictions = model_fitted.predict(start=len(train_data), end=len(train_data) + len(test_data)-1) print(predictions) ```

Here, we have printed the coeffiecient of model and the predicted values.

## Step 6 - Lets look at our dataset now

Once we run the above code snippet, we will see:

```Scroll down the ipython file to visualize the output.
```

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