In this blog post, we will explore how the new **Python in Excel** feature enables a completely new way to work with time series data in Excel. Thanks to its built-in integration with **Anaconda Distribution**, it is now possible to leverage on Python data modeling capabilities, making time series analysis in Excel a whole new experience.

**Note**: To reproduce the examples in this post, install the *Python in Excel* trial.

## A Time Series Primer

If you want to predict trends in temporal data, **time** is an important factor that must be considered in many types of analyses. Classic examples of this kind of analysis can be found in many domains. For example, in finance time series analysis can be used by stock trades to get a better understanding of various stock prices. Similarly in healthcare, temporal data (generally also referred to as longitudinal data) are used to denote the health trajectories of patients, with the intention to predict disease or recovery progression. Another example of time series analysis can be found in meteorology, where temporal data are used in many use cases like temperature forecasting or air quality control. In this blog post, we will consider an example of air pollution forecasting, exploring how the new integration of Python would allow for unprecedented time series analysis features in Excel.

In simple terms, a **time series** can be defined as a series of data points, ordered in time. Most commonly, a time series comprises a sequence of successive equally spaced points in time (e.g., every 5 minutes, or every hour), so that in essence what we normally deal with are *discrete* temporal data sequences.

In a time series, time is the **independent variable**, and the goal of the data analysis is usually to make a forecast for the future. However, there are other important aspects that should be considered whenever we work with temporal data: (1) *autocorrelation*, (2) *seasonality*, (3) *stationariness*.

Informally, *autocorrelation* is how similar multiple observations are over a certain period of time (i.e., the **time lag**). On the other hand, *seasonality* tries to capture the concept of periodic fluctuations in the data. For example, “prices of goods are higher during holiday seasons.” A time series is referred to as *stationary* if its statistical properties do not change over time. In other words, it has *constant mean and variance, and its covariance is independent of time*.

There are many ways to model a time series in order to make predictions. The most popular methods are: Moving Average, Exponential smoothing, and ARIMA. In this post, we will consider the latter in our experiments, as it is one of the most powerful ones that also better demonstrates the new capabilities introduced by Python in Excel. If you are interested in knowing more about time series modeling in Python, I recommend checking out the GitHub repository by Francesca Mazzeri, Machine Learning at Microsoft, with examples using Anaconda Distribution and Azure Cloud.

Intuitively, **ARIMA** (AutoRegressive Integrated Moving Average) is defined as a model resulting from the combination of three simpler models, designed to work on univariate time series exhibiting non-stationary properties. It combines *AutoRegression* (AR) and *Moving Average* (MA) models, along with a differencing pre-processing step of the sequence to make the sequence stationary, called *integration* (I). More information on ARIMA models can be found in the corresponding Wikipedia article.

## Forecasting Air Pollution with Python in Excel

First, let’s download the Excel workbook containing the air_pollution.xlsx data.

In this example, we will consider a dataset containing (daily) data about air pollution. Each entry in the dataset is characterized by its date, the level of pollution on the current day, the day before, along with other info about weather conditions on the day (e.g., if any rain, wind, snow, pressure, and the temperature).

*Dataset Info*

The first thing we are going to do is to describe our data, by loading the Excel table into a pandas.DataFrame using Python in Excel. In this way, we will also get our bearings with the new integration.

Let’s create a new worksheet, and name it *Data Info*.

Let’s now convert the A1 cell into a Python cell. We can do that using =PY or using the keyboard shortcut Ctrl + Shift + Alt + P. In the formula editor, let’s write the following few lines of Python to convert the Excel table in a pandas data frame:

**import** pandas **as** pd

air_pollution = xl("Table1[#All]", headers=True)

air_pollution["date"] = pd.to_datetime(air_pollution["date"])

air_pollution.set_index("date", inplace=True)

air_pollution.describe()

First of all, we rely on the new xl() function to automatically span over the whole range of the table, which is automatically converted into a DataFrame object in Python.

We then make sure that the date column is parsed correctly as a datetime object, and we set that column as the index of our table. In this way, our data will be indexed by the corresponding date, which will make things a bit easier to work with when considering the temporal dimension. Lastly, we gather some statistics of the data using the describe method.

These statistics are indeed informative by themselves, but a better way to visualize our temporal data would be to visualize the trends of each column. This will also give us the opportunity to see how Python plotting capabilities work in Excel.

Let’s start by defining a simple Python function that will accept the name of a column and generate the corresponding plot.

The columns available in our table are:

pollution_today, dew, temp, press, wind_speed, snow, rain, pollution_yesterday

Let’s move on the J1 cell, which we will convert into a Python cell:

**from** matplotlib **import** pyplot **as** plt

plt.style.use('bmh') *# set the plotting style*

values = air_pollution.values**def** plot_data_trends(column_name):

fig = plt.figure()

idx = air_pollution.columns.to_list().index(column_name)

plt.plot(values[:, idx])

plt.title(column_name, y=1, loc="right")

**return** fig

*“Plotting function definition”*

Now, let’s call this function multiple times on the different column names and generate the plots. To do so, let’s first list all the columns in consecutive Excel cells in a new Python cell (e.g., J2):

`air_pollution.columns`

This will spill in consecutive cells all the names of the columns of the air_pollution DataFrame.

Now, let’s write the following code in B11 (for example) after converting it into a Python cell:

`plot_data_trends(xl("$J2"))`

This will generate the data trend for the first column. Now, let’s drag the cell content over the following 6 consecutive rows, have Excel do its magic by automatically updating the reference to the column name, and generate the corresponding plot! Once done, adjust the **row height**, and **column width** accordingly to fit the visualization of the plots within the cells (e.g., Row Height = 250).

A quick note about Python cells output before proceeding. At the time of writing, the default **output mode** of a Python cell is *Python Object* (see picture below). This mode displays the generated images in the cell as â€śImage Objectâ€ť.

However, in this case, we are more interested in actually looking at the images. To do so, letâ€™s select all seven cells, and switch their output mode to â€śExcel valueâ€ť all at once. This will display the generated plots as shown in the picture below. From now on, we will assume to switch to â€śExcel valueâ€ť every time we generate a new plot in Excel.

For more information about Python cell outputs, and their integration with Excel, I recommend checking out this blog article, 5 Quick Tips for Using Python in Excel.

*Decomposing Our Time Series*

One of the most common analyses for time series is **decomposing it into multiple parts**.

The parts we can divide a time series into are level, trend, seasonality, and noise. All series contain level and noise but seasonality and trend are not always present.

These 4 parts can be combined either additively or multiplicatively into the time series.

Identifying each one of the different parts of the time series, and their behavior in the data, may affect your models in different ways. The Python statsmodel provides a seasonal_compose() function to *automatically decompose* a time series, after specifying whether the model we want to use to combine the data is either *additive* or *multiplicative*.

Let’s create a new worksheet called *“Time Series Components.”* Next let’s move to the top left cell A1 and write the following Python code, using statsmodel.seasonal_decompose.

**from** statsmodels.tsa.seasonal **import** seasonal_decompose**import** matplotlib **as** mpl*# Adjust the styling of the plot with Matplotlib*`mpl.rcParams['axes.labelsize'] = 14`

mpl.rcParams['xtick.labelsize'] = 12

mpl.rcParams['ytick.labelsize'] = 12

mpl.rcParams['text.color'] = 'k'

mpl.rcParams['figure.figsize'] = 18, 8`series = air_pollution.pollution_today[:365]`

result = seasonal_decompose(series, model='multiplicative')

result.plot()

After importing the necessary packages, the first few lines in the snippet are only necessary to set up a few parameters for the plot generated using matplotlib. The important lines are the last three: we gather the values of pollution_data over the first year (2010, first 365 days), and then we decompose the time series in three **parts**: trend, seasonal, and residual. These parts are respectively represented in the generated graph shown below, as also indicated by the legend on the y-axis of each plot.

Let’s have a quick look at the trend in our data, to further explore the potential of working with Python in Excel.

A *trend* in our data is present whenever there is an increasing or decreasing slope observed in the time series. Generally, we want to get rid of trends in data, as this would allow us to isolate any seasonality present in the data, pulling out the periodic content of the time series.

It is finally the time to further expand our Pythonic skills in Excel, and try some methods to check for trends in our series. In a few lines of Python, we will try:

- Automatic decomposing
- Moving average
- Fit a linear regression model to identify a trend

Let’s move on A2 cell, and write the following Python code after =PY. Please note that we will reference those methods in code comments for clarity. Also notice that the result Python variable referenced in the code is the same defined in the previous cell, accessible via the shared global namespace of Python in Excel.

**import** numpy **as** np**from** sklearn.linear_model **import** LinearRegression

fig = plt.figure(figsize=(15, 7))

layout = (3, 2)

pm_ax = plt.subplot2grid(layout, (0, 0), colspan=2)

mv_ax = plt.subplot2grid(layout, (1, 0), colspan=2)

fit_ax = plt.subplot2grid(layout, (2, 0), colspan=2)

*# 1. Automatic decomposition trend*`pm_ax.plot(result.trend)`

pm_ax.set_title("Automatic decomposed trend")

*# 2. Moving Average*`mm = air_pollution.pollution_today.rolling(12).mean()`

mv_ax.plot(mm)

mv_ax.set_title("Moving average 12 steps")

*# 3. Linear Regression*`X = np.arange(len(air_pollution.pollution_today))`

X = X[:, np.newaxis]

y = air_pollution.pollution_today.values

model = LinearRegression()

model.fit(X, y)

*# calculate trend and generate the plot*`trend = model.predict(X)`

fit_ax.plot(trend)

fit_ax.set_title("Trend fitted by linear regression")

plt.tight_layout()

This may take a few seconds to complete, and you should be seeing graphs as reported below in a unique plot:

We can see that our series does not have a strong trend, which is good news as this means there isnâ€™t much data cleaning we need to do. Results from both the automatic decomposition and the moving average look more like a seasonality effect + random noise than a trend. This is further confirmed by the linear regression plot (the third from the top) which generates a poor trend.

*Time Series Modelling*

Let’s now move on to the last step in our time series modeling with Python in Excel, and let’s explore how we can set up and run time series forecasting with ARIMA in Python for our data.

Let’s first create a new modeling worksheet, named *“Modeling.”*

First, we must prepare our data for modeling, by creating a *training* and a *test* data partition. These two partitions (i.e., two disjoint subsets) will be respectively used to train our forecasting model and to check how the model is performing on future predictions on unseen (*test*) data.

In the A1 Python cell, write the Python code below:

`RANDOM_SEED = 12345`

np.random.seed(RANDOM_SEED)

split_date = '2014-01-01'

df_training = air_pollution.loc[air_pollution.index <= split_date]

df_test = air_pollution.loc[air_pollution.index > split_date]

f"Data Partitioning: {len(df_training)} days of training data - {len(df_test)} days of testing data"

Since we are dealing with temporal data, the data partitioning will be applied based on a reference date in time, in our case the 2014-01-01. All data before that date will be used for **training** our model. All days afterward, to **test** model forecasting capabilities.

As output of that cell, this is what you should be getting:

Data Partitioning: 1461 days of training data – 364 days of testing data

Let’s now try two forecasting models on our data, SimpleExpSmoothing and ARIMA, using the Statsmodel, which is one of the **core** libraries of Python in Excel.

Statsmodel is the standard for time series modeling in Python, however, its API can be tricky for beginners. Therefore, Iâ€™ve included a working code example as a starting point to help you get started faster.

The good news is that the **same** code can be used for both the considered methods (only the single line invoking the selected method will be changed). I have included comments in the following code so you can follow along for a better understanding. The second code example will simply switch the line calling the SimpleExpSmoothing with ARIMA.

In cell A2, let’s write the following Python code to forecast air pollution using Simple Exponential Smoothing. The analysis plan is to walk through the test data, train the model, and predict 1 day ahead at a time, then repeat the process for all days in the test samples. See the comments in the code to follow along the multiple steps.

**from** statsmodels.tsa.holtwinters **import** SimpleExpSmoothing

*# letâ€™s create a list holding generated predictions by the model*`yhat = list()`

*# Iterate over the multiple time steps in test data (days, in this case)***for** t **in** range(len(df_test.pollution_today)):*# Compose the training sequence (temp_train) by adding to the whole # training data one single time step (t), i.e. day*

` temp_train = air_pollution[:len(df_training)+t]`

*# Instantiate the prediction model, SimpleExpSmoothing with temp_train*

` model = SimpleExpSmoothing(temp_train.pollution_today)`

*# fit the model, and generate predictions*

`model_fit = model.fit()`

predictions = model_fit.predict(start=len(temp_train),

end=len(temp_train))

*# Store the generated predictions*

` yhat = yhat + [predictions]`

*# Stack together all the generated predictions*`yhat = pd.concat(yhat)`

*# Letâ€™s finally generate the plot with test data, and generated predictions*`fig = plt.figure()`

plt.plot(df_test.pollution_today.values, label="Original")

plt.plot(yhat.values, color='red', label="ExpSmoothing predicted")

plt.legend()

fig

The final result is reported below:

Now it is time to try our ARIMA model. In a different cell, say B2 letâ€™s write the following code. Please note that the only few differences in the code are highlighted **in bold**:

**from** statsmodels.tsa.arima.model **import** ARIMA`yhat = list()`

**for** t **in** range(0, len(df_test.pollution_today)):

temp_train = air_pollution[:len(df_training)+t]

**model = ARIMA(temp_train.pollution_today, order=(1, 0, 0))**

model_fit = model.fit()

predictions = model_fit.predict(start=len(temp_train),

end=len(temp_train),

**dynamic=False**)

yhat = yhat + [predictions]

yhat = pd.concat(yhat)

fig = plt.figure(figsize=(14, 8))

plt.plot(df_test.pollution_today.values, label='Original')

plt.plot(yhat.values, color='red', **label='ARIMA predicted'**)

plt.legend()

fig

This code produces the following result using the ARIMA model.

**Note:** Executing this cell will take some time, as the ARIMA model is more complex, and the dataset is not a small one. If it takes too much time on your computer to finish, you can reduce the number of steps in the prediction, for example, the number of days considered in the test set. In other words, replacing the outer loop with the following line, only considering the next quarter (90 days):

`for t in range(0, len(df_test.pollution_today[:90]))`

## Conclusion

In this post, we have explored the great potential offered by the new **Python in Excel** integration when working with time series data, for analysis and forecasting. Thanks to its natural integration with **Anaconda Distribution**, the new integration allows users to access packages like numpy, scikit-learn, and stats models directly within the Excel workbook, allowing us a brand new way to process temporal data in Excel.

The final version of the **air_pollution_with_python.xlsx** Workbook can be publicly downloaded here.

*Disclaimer: The Python integration in Microsoft Excel is in Beta Testing as of the publication of this article. Features and functions are likely to change. **Donâ€™t hesitate to reach out** if you notice an error on this page. *

## Bio

Valerio Maggio is a researcher and data scientist advocate at Anaconda. He is also an open-source contributor and an active member of the Python community. Over the last 12 years, he has contributed to and volunteered at many international conferences and community meetups like PyCon Italy, PyData, EuroPython, and EuroSciPy.