A method for receiving a data stream that includes data samples, each data sample having one of a plurality of actual values. For each data sample in the data stream, a first index in a dictionary is selected. The dictionary includes indices corresponding to each of the plurality of actual values. The first index corresponds to an actual value of the data sample. A predicted value of the data sample is generated in response to previously received data samples in the data stream and to a prediction algorithm. A second index in the dictionary that corresponds to an actual value in the dictionary that is closest to the value of the predicted value is selected. The difference between the first index and the second index is calculated and compressed. The compressed difference between the first index and the second index is then output. This process is performed for each data sample in the data stream.