Book Image

Machine Learning for Finance

By : Jannes Klaas
Book Image

Machine Learning for Finance

By: Jannes Klaas

Overview of this book

Machine Learning for Finance explores new advances in machine learning and shows how they can be applied across the financial sector, including insurance, transactions, and lending. This book explains the concepts and algorithms behind the main machine learning techniques and provides example Python code for implementing the models yourself. The book is based on Jannes Klaas’ experience of running machine learning training courses for financial professionals. Rather than providing ready-made financial algorithms, the book focuses on advanced machine learning concepts and ideas that can be applied in a wide variety of ways. The book systematically explains how machine learning works on structured data, text, images, and time series. You'll cover generative adversarial learning, reinforcement learning, debugging, and launching machine learning products. Later chapters will discuss how to fight bias in machine learning. The book ends with an exploration of Bayesian inference and probabilistic programming.
Table of Contents (15 chapters)
Machine Learning for Finance
Contributors
Preface
Other Books You May Enjoy
Index

A text classification task


A common NLP task is to classify text. The most common text classification is done in sentiment analysis, where texts are classified as positive or negative. In this section, we will consider a slightly harder problem, classifying whether a tweet is about an actual disaster happening or not.

Today, investors have developed a number of ways to gain information from tweets. Twitter users are often faster than news outlets to report disasters, such as a fire or a flood. In the case of finance, this speed advantage can be used and translated to event-driven trading strategies.

However, not all tweets that contain words associated with disasters are actually about disasters. A tweet such as, "California forests on fire near San Francisco" is a tweet that should be taken into consideration, whereas "California this weekend was on fire, good times in San Francisco" can safely be ignored.

The goal of the task here is to build a classifier that separates the tweets that relate...