Predictive analytics is an area of statistical analysis that deals with extracting information from data and using it to anticipate future trends and behavior patterns based on a variety of techniques from statistics and data mining. The core lies in capturing relationships between explanatory variables and the predicted variables from the past occurrences and exploiting this information to predict future outcomes.
In business, predictive models exploit patterns found in historical and transactional data to identify risk and opportunities. Models capture relationships among many factors to allow assessment of risk or potential associated with a particular set of conditions, guiding decision-making for candidate transactions. Predictive analytics are also applied in insurance, telecommunications, retail, travel, health care, pharmaceuticals and other industries.
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