Evaluation of Theils U: A Naïve Forecast Application

The reliability of any forecast needs to be tested effectively with an empirical data. Simple or complicated forecast methods have many a time failed subjected to empirical examination. There is no agreement among scholars as to which metric is the best for determining the best forecasting method. So this paper evaluates the basic of forecast techniques of predicting the future values and comparing its accuracy by Theil's U statistic. The predicted values were estimated by Naïve's method and the errors are calculated to verify the accuracy of the forecasted values as well. The testing has been done with a set of fictitious data set which helps to explain the steps in establishing the accuracy of the projected model