Do you know the difference between data science and computer science? Many people don’t realize that these two disciplines are actually quite different. In this blog post, we will compare data science vs. computer science and discuss the benefits of each field. We will also provide some resources for those …

The unpredictability of the markets is a well-known fact. Despite this, many traders and portfolio managers continue to try to predict market volatility and manage their risks accordingly. Usually, econometric models such as GARCH are used to forecast market volatility. In recent years, machine learning has been shown to be …

There is a great deal of interest in machine learning within the finance industry. Financial professionals are looking for ways to use machine learning to improve their decision making, and to gain an edge over their competition. There are a number of books on the topic of machine learning in …

We have discussed how the volatility index, VIX, and the yield curve can be used to predict recessions. On a similar topic, a recent paper argued that machine learning models are outperforming logistic regression when it comes to predicting financial crises. It explored the reasons behind this and showed …

There are many machine learning applications in the finance world. The most common machine learning application found in finance is predictive analytics, which is used to predict future events based on past data. Predictive analytics can be applied to any number of areas within a financial institution including loan origination, …

Machine learning is a field of computer science that has been gaining popularity in the last few years.  It’s is a branch of Artificial Intelligence (AI) that uses algorithms to learn from data without having explicit instructions on how to do so as traditional programming does. Machine Learning provides systems …

A trading system is a set of rules that a trader uses to make buy and sell decisions. It’s commonly believed that a profitable trading system should be simple, with few parameters, so that it can be easily understood and followed. It is also important for the system to be …

Pairs trading is a quantitative trading strategy that is often discussed in the academic as well as practitioners’ literature. We have written about this trading strategy extensively from different perspectives. In this post, we’re going to look at the risk/PnL drivers of the pairs trading strategy. Reference pointed out …

Both econometrics and machine learning provide a way for analysts to have a glimpse of the future, and on that basis, make predictions. As research methodologies, both strive towards the same goal: inducing new knowledge. And, for this purpose, they adopt statistical tools, making for precision in scientific research. However, …

In a previous post, we presented an article on using an econometric model for predicting the P/E ratio. In this post, we will discuss a different approach for predicting a firm’s financials. Reference utilized the Gradient boosting method for predicting a firm’s profitability. Gradient boosting is a method that …