Course
Machine Learning for Finance in Python
IntermediateSkill Level
Updated 08/2024PythonMachine Learning4 hr15 videos59 Exercises5,150 XP32,729Statement of Accomplishment
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How to Predict Stock Prices with Machine Learning
Machine learning has a huge number of applications within the finance industry and is commonly used to predict stock values and maintain a strong stock portfolio. This course will teach you how to use Python to calculate technical indicators from historical stock data and create features and targets.Build Your Knowledge of ML Models
Strong stock predictions start with good data preparation. You’ll learn how to prepare your financial data for ML algorithms and fit it into various models, including linear models, xgboost models, and neural network models.The second chapter moves on to using Python decision trees to predict future values for your stock, and forest-based machine learning methods to enhance your predictions.
The second half of this course will cover how to scale your data for use in KNN and neural networks before using those tools to predict the future value of your stock. You’ll learn how to plot losses, measure performance, and visualize your prediction results.
Use the Sharpe Ratio to Build Your Ideal Portfolio
Machine learning can also help you find the optimal stock portfolio. You’ll learn how to use modern portfolio theory (MPT) and the Sharpe ratio as part of your process to predict the best portfolios. Once you’ve completed this course, you’ll also understand how to evaluate the performance of your machine learning-predicted portfolio.You’ll use a variety of real-world data sets from NASDAQ and apply robust theories and techniques to them so that you can create your own predictions and optimize for your risk appetite and budget. "
Prerequisites
Supervised Learning with scikit-learn1
Preparing data and a linear model
In this chapter, we will learn how machine learning can be used in finance. We will also explore some stock data, and prepare it for machine learning algorithms. Finally, we will fit our first machine learning model -- a linear model, in order to predict future price changes of stocks.
2
Machine learning tree methods
Learn how to use tree-based machine learning models to predict future values of a stock's price, as well as how to use forest-based machine learning methods for regression and feature selection.
3
Neural networks and KNN
We will learn how to normalize and scale data for use in KNN and neural network methods. Then we will learn how to use KNN and neural network regression to predict the future values of a stock's price (or any other regression problem).
4
Machine learning with modern portfolio theory
In this chapter, you'll learn how to use modern portfolio theory (MPT) and the Sharpe ratio to plot and find optimal stock portfolios. You'll also use machine learning to predict the best portfolios. Finally, you'll evaluate performance of the ML-predicted portfolios.
Machine Learning for Finance in Python
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FAQs
How is machine learning used in finance?
Machine learning algorithms are used throughout the finance industry to automate trading activities, predict stock market changes, detect fraud, and provide financial advice to investors.
What is Sharpe’s ratio?
Sharpe’s ratio adjusts a portfolio’s past performance or predicted future performance based on the risk taken by the investor. The inputs for the ratio are the expected value, asset return, risk-free return, and standard decision of the asset excess return.
What is Modern Portfolio Theory?
Modern Portfolio Theory, or MPT, is a method for choosing investments that allows investors to maximize predicted return within a given level of risk. It assumes that a portfolio’s overall risk and return is more important than the risk/return of any individual investment within that portfolio.
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