Prediction¶

This chapter is about predicting the value of one variable based on information about another. Our main predictor will be conditional expectation, which we defined earlier but will now examine as a guess for one variable given the value of another.

We will define a criterion for comparing predictions, and identify the best predictor using that criterion. The concept of correlation, introduced earlier as the covariance between two standardized variables, will be used to assess predictions made by the regression method.