Single particle tracking is a powerful technique for investigating the dynamic behavior of biological molecules. However, many of the analytical tools are prone to generate results that can lead to mistaken interpretations of the underlying transport process. Here, we explore the effects of localization error and confinement on the velocity autocorrelation function, Cυ. We show that calculation of Cυ across a range of discretizations can distinguish the effects of localization error, confinement, and medium elasticity. Thus, under certain regimes, Cυ can be used as a diagnostic tool to identify the underlying mechanism of anomalous diffusion. Finally, we apply our analysis to experimental data sets of chromosomal loci and RNA-protein particles in Escherichia coli.