Business Forecasting
The Partial Autocorrelation Function (PACF) measures the correlation between observations of a time series at different lags, controlling for the values of the time series at all shorter lags. It helps identify the direct relationship between an observation and its lagged values, making it essential for determining the order of autoregressive terms in time series models. By isolating the effect of shorter lags, the PACF allows for a clearer understanding of which past values have the most significant influence on future observations.
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