**Abstract**

In this chapter, a low-cost micro electro mechanical systems (MEMS) gyroscope drift is modeled by time series model, namely, autoregressive-moving-average (ARMA). The optimality of ARMA (2, 1) model is identified by using minimum values of the Akaike information criteria (AIC). In addition, the ARMA model based Sage-Husa adaptive fading Kalman filter algorithm (SHAFKF) is proposed for minimizing the drift and random noise of MEMS gyroscope signal. The suggested algorithm is explained in two stages: (i) an adaptive transitive factor (*a*1) is introduced into a predicted state error covariance for adaption. (ii) The measurement noise covariance matrix is updated by another transitive factor (*a*2). The proposed algorithm is applied to MEMS gyroscope signals for reducing the drift and random noise in a static condition at room temperature. The Allan variance (AV) analysis is used to identify and quantify the random noise sources of MEMS gyro signal. The performance of the suggested algorithm is analyzed using AV for static signal. The experimental results demonstrate that the proposed algorithm performs better than CKF and a single transitive factor based adaptive SHFKF algorithm for reducing the drift and random noise in the static condition.

**Keywords:** strap down inertial navigation system (SINS), MEMS gyro (MEMS), random drift, Sage-Husa adaptive Kalman filter (SHAKF), Allan variance
