What type of analysis predicts future outcomes based on historical data?

Predictive analytics focuses on forecasting future outcomes by utilizing historical data and statistical algorithms. This type of analysis identifies patterns and trends from past data to create models that can predict future events or behaviors. It employs techniques such as machine learning, statistical modeling, and data mining to analyze current and historical data, generating insights that help forecast potential future scenarios.

For instance, in a sales context, predictive analytics might analyze previous buying behaviors to estimate future sales trends, allowing businesses to make informed decisions about inventory and marketing strategies. This distinguishes it from other types of analytics. Descriptive analytics summarizes past data to understand what has happened. Prescriptive analytics recommends actions based on data, while diagnostic analytics explains why something happened, focusing on causal relationships rather than predictions about the future.