Prediction of the Standard and Poors 500 Index Based on ARIMA Model

The recent rapid development of science and technology and the changeable international situations are intensifying the uncertainty in future economic situations. Economic trends in markets such as real estate markets and stock markets become increasingly unpredictable. To gain an insight into the future, this essay makes a prediction on the Standard and Poor s 500 index by applying the ARIMA model, a model commonly used by scientists to analyze time series. Data at the ends of each year from 1957 to 2023 were collected and processed by second-order differentiation, in order to establish the model. Considering different possible p, d, and q values, the most suitable model was selected thorough comparison of criteria indexes AIC, BIC, and RMSE. The essay makes a 12-year prediction, which shows that the index will continue to increase with fluctuations. However, the model still has limitations in predicting the influence of random future events, which calls for further improvement and adjustment based on real-world situations.