Stochastic vs. probabilistic forecasting

Stochastic forecasting and probabilistic forecasting both address uncertainty in predictions but differ in approach and implementation. Stochastic forecasting uses stochastic processes or simulations to model random variations and generate multiple possible future scenarios, emphasizing variability and randomness in outcomes. In contrast, probabilistic forecasting represents uncertainty by providing probability distributions of future outcomes based on historical data and statistical models, offering a range of potential outcomes with associated likelihoods rather than deterministic point estimates.