The interval estimate of any variable is known as the prediction interval. It helps decide if a point estimate is dependable.
However, the point estimate is most likely not the exact value of the population parameter, but close to it. After calculating point estimates, we construct interval estimates, called confidence intervals or prediction intervals. This prediction interval comprises a range of values unlike the point estimate and is a better predictor of the observed sample value, y.
The prediction interval can be constructed with the help of the standard error of estimate – a value that indicates the spread of data points around the regression line.
This text is adapted from Openstax, Introductory Statistics, Section 8, Confidence Interval.
