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

Causal learning


This book is by and large a book about statistical learning. Given data X and targets Y, we aim to estimate , the distribution of target values given certain data points. Statistical learning allows us to create a number of great models with useful applications, but it doesn't allow us to claim that X being x caused Y to be y.

This statement is critical if we intend to manipulate X. For instance, if we want to know whether giving insurance to someone leads to them behaving recklessly, we are not going to be satisfied with the statistical relationship that people with insurance behave more reckless than those without. For instance, there could be a self-selection bias present about the number of reckless people getting insurance, while those who are not marked as reckless don't.

Judea Pearl, a famous computer scientist, invented a notation for causal models called do-calculus; we are interested in , which is the probability of someone behaving recklessly after we manipulated...