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

Part-of-speech (POS) tagging


On Tuesday, October 10, 2017, between 9:34 AM and 9:36 AM, the US Dow Jones newswire encountered a technical error that resulted in it posting some strange headlines. One of them was, "Google to buy Apple." These four words managed to send Apple stock up over two percent.

The algorithmic trading systems obviously failed here to understand that such an acquisition would be impossible as Apple had a market capitalization of $800 billion at the time, coupled with the fact that the move would likely not find regulatory approval.

So, the question arises, why did the trading algorithms choose to buy stock based on these four words? The answer is through part-of-speech (POS) tagging. POS tagging allows an understanding of which words take which function in a sentence and how the words relate to each other.

spaCy comes with a handy, pretrained POS tagger. In this section we're going to apply this to the Google/Apple news story. To start the POS tagger, we need to run the...