How Machine Learning Is Changing The World: Artificial Intelligence In Finance Predicts Stocks And Bonds

Much of the current machine learning revolution originated around applications like computer vision that have nothing to do with finance. Financial data modeling is beset by a low signal to noise ratio, whereas data used to teach a computer to identify a picture of a cat, for example, is unambiguous. The financial universe is a non-stationary environment with variable patterns of correlation between stocks, bonds and other instruments. Not least, the task in hand is essentially about predicting things that haven't happened yet. For nearly 30 years now, U.K. hedge fund manager Man AHL has been trawling through enormous historical datasets trying to understand what is predictable and what's just noise.