Silver and Palladium Price Dynamics: Analyzing Relationships and Forecasting with ARIMA and Prophet

and the efficiency of the ARIMA and Prophet models in the forecast
of price movements. As these two valuable metals are increasingly
used in major industries, an understanding of their price mechanism
is very relevant for investors, analysts, and policymakers. It thus
analyzes the short-run and long-run linkages between the prices of
silver and palladium to identify to what extent these two metals share
the same price patterns. We have used the historical price series to
analyze this correlation over varying time horizons, and despite both
metals recording some common price patterns, their relationship
really fluctuates heavily in the near term due to market speculation,
industrial demand, and various geopolitical events, while long-term
correlations are more stable at the influence of broader economic and
industrial trends. Besides, the study gauges the predictive
performance of two widely used forecasting models: ARIMA and
Prophet. An ARIMA model is a classical time series forecasting
technique applied for modeling and predicting linear trends in price
data. A Prophet model, which is more flexible and developed by
Facebook, is assessed for handling seasonality, outliers, and missing
data. The results indicated that ARIMA is relatively good at
predictions in stable market conditions but can't work well during
volatile periods. In contrast, Prophet has a better forecast capability
in capturing both the short-run fluctuations and the long-run trends.
This study therefore concludes that price correlation analysis coupled
with advanced predictive modeling will lead to an improvement in
forecasting accuracy and hence better decision-making in both silver
and palladium markets.