Predictive Analytics – Definition

Cite this article as:"Predictive Analytics – Definition," in The Business Professor, updated December 15, 2019, last accessed October 20, 2020,


Predictive Analytics Definition

Predictive analytics is a form of analytics that seeks to predict the outcome of unknown future events using modeling and advanced statistical techniques. Predictive analytics also uses current and past data to determine the future performance of events. Information is extracted from the data sets using data mining techniques to predict likely future events. Businesses and investors leverage predictive analytics to make definitive business decisions aimed at maximizing possible future events.  The common advanced statistical techniques used in predictive analytics are machine learning, artificial intelligence, data mining, and predictive modeling used in analyzing current and historical data to predict future performance.

A Little More on What are Predictive Analytics

Predictive analytics is both an analytical tool and a decision-making tool that is important for businesses and investors. In making business decisions, corporations and investors need to examine past patterns to predict trends or outcomes that are likely to occur in the future. Predictive analytics should not be confused for a toll that tells what will happen in the happened, rather, this statistical analysis predicts likely future patterns and occurrences.

Active market traders leverage predictive analytics methods to make trade decisions by drawing information from past and current data. The likely policies that a company can apply when faced with certain situations are influenced by predictive analytics.

Common Misconceptions of Predictive Analytics

There are some misconceptions about predictive analytics, the common ones are;

  • Predictive analytics is mistaken to be a tool that tells what will happen in the future. However, predictive analytics only predict likely future occurrences.
  • Predictive analytics uses advanced statistical techniques machine learning, artificial intelligence, data mining, and predictive modeling. Given this fact, it is commonly confused to be the same as machine learning but predictive analytics is different from machine learning.

References for “Predictive Analytics › SAS Insights › Analytics Insights › Investing › Financial Analysis

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