Beating the S&P500 Using Machine Learning

A machine learning algorithm written in Python was designed to predict which companies from the S&P 1500 index are likely to beat the S&P 500 index on a monthly basis. To do so, a random forest regression based algorithm, taking as input the financial ratios of all the constituents of the S&P 1500, was implemented. We will therefore skip step 1 in this article. Those with access to the datasets through the required subscriptions can instead refer to the complete notebook hosted on the following Github project: SP1500StockPicker. The random forest method is based on multiple decision trees.