Statistical analysis

Statistical analysis is a component of data analytics. In the context of business intelligence (BI), statistical analysis involves collecting and scrutinizing every data sample in a set of items from which samples can be drawn. A sample, in statistics, is a representative selection drawn from a total population.

Statistical analysis can be broken down into five discrete steps, as follows:

1. Describe the nature of the data to be analyzed.
2. Explore the relation of the data to the underlying population.
3. Create a model to summarize understanding of how the data relates to the underlying population.
4. Prove (or disprove) the validity of the model.
5. Employ predictive analytics to run scenarios that will help guide future actions.

The goal of statistical analysis is to identify trends. A retail business, for example, might use statistical analysis to find patterns in unstructured and semi-structured customer data that can be used to create a more positive customer experience and increase sales.

Types of Statistical Analysis

There are two main types of statistical analysis: descriptive statistics, which describes the main features of a collection of data, and inferential statistics, which involves reaching conclusions from data that are subject to random variation.

Descriptive Statistics

Descriptive statistics summarize and organize characteristics of a data set. A data set may include any number of variables, or various pieces of information that certain occurrences are associated with. If a data set includes a large number of observations, descriptive statistics may be used to simplify and present the data in a way that is easy to understand.

Inferential Statistics

Inferential statistics is concerned with making predictions or inferences about a population from observations and analyses of a sample. That is, inferential statistics uses a small sample of data to say something about what the population might think. Or, inferential statistics helps us to make an educated guess about a population parameter based on a statistic computed from a sample randomly drawn from that population.

See Also

• Data analysis
• Data mining
• Predictive analytics
• Business intelligence

Statistical analysis Resources
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