Chapter 6: Predictive Analytics in Finance
Predictive Modeling
In Chapter One, we described predictive analytics as the process of using data and an assortment of advanced statistical methods to predict future events, behaviors, and trends. Although the literature on predictive analytics is quite large, there are not that many that have presented their finance applications. In this chapter, we will explore some of these predictive methods but mostly focus on their applications in the finance domain.1 As highlighted in the previous chapter, many of the topics that will be presented in this chapter are based on well-established econometric and statistical theories. You will probably encounter more mathematical constructs and notations. As in previous ...
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