Understand the four primary types of data analysis
Data analysis is categorized into four types based on the goal of the analysis and the question it aims to answer:
- Descriptive Analytics: Answers "What happened?" by summarizing past data (e.g., tracking KPIs or cash flow analysis).
- Diagnostic Analytics: Answers "Why did it happen?" by digging deeper into descriptive insights to find the root cause (e.g., investigating a sudden spike in website traffic).
- Predictive Analytics: Answers "What will happen next?" by using historical data and trends to forecast probabilistic future outcomes (e.g., risk assessment or sales forecasts).
- Prescriptive Analytics: Answers "What should be done about it?" by analyzing past decisions and events to determine the best course of action (e.g., self-driving car navigation or dynamic airline ticket pricing).