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Exercise

Plot diagnostics

It is important to know when you need to go back to the drawing board in model design. In this exercise you will use 4 common plots to decide whether a model is a good fit to some data.

Here is a reminder of what you would like to see in each of the plots for a model that fits well:

Test Good fit
Standardized residual There are no obvious patterns in the residuals
Histogram plus kde estimate The KDE curve should be very similar to the normal distribution
Normal Q-Q Most of the data points should lie on the straight line
Correlogram 95% of correlations for lag greater than zero should not be significant

An unknown time series df and the ARIMA model class are available for you in your environment.-

Instructions 1/3
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  • Fit an ARIMA(1,1,1) model to the time series df.
  • Create the 4 diagnostic plots.
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