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Machine Learning for Finance

You're reading from   Machine Learning for Finance Principles and practice for financial insiders

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Product type Paperback
Published in May 2019
Publisher Packt
ISBN-13 9781789136364
Length 456 pages
Edition 1st Edition
Languages
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Authors (2):
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Jannes Klaas Jannes Klaas
Author Profile Icon Jannes Klaas
Jannes Klaas
James Le James Le
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James Le
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Table of Contents (15) Chapters Close

Machine Learning for Finance
Contributors
Preface
Other Books You May Enjoy
1. Neural Networks and Gradient-Based Optimization 2. Applying Machine Learning to Structured Data FREE CHAPTER 3. Utilizing Computer Vision 4. Understanding Time Series 5. Parsing Textual Data with Natural Language Processing 6. Using Generative Models 7. Reinforcement Learning for Financial Markets 8. Privacy, Debugging, and Launching Your Products 9. Fighting Bias 10. Bayesian Inference and Probabilistic Programming Index

Topic modeling


A final, very useful application of word counting is topic modeling. Given a set of texts, are we able to find clusters of topics? The method to do this is called Latent Dirichlet Allocation (LDA).

Note

Note: The code and data for this section can be found on Kaggle at https://www.kaggle.com/jannesklaas/topic-modeling-with-lda.

While the name is quite a mouth full, the algorithm is a very useful one, so we will look at it step by step. LDA makes the following assumption about how texts are written:

  1. First, a topic distribution is chosen, say 70% machine learning and 30% finance.

  2. Second, the distribution of words for each topic is chosen. For example, the topic "machine learning" might be made up of 20% the word "tensor," 10% the word "gradient," and so on. This means that our topic distribution is a distribution of distributions, also called a Dirichlet distribution.

  3. Once the text gets written, two probabilistic decisions are made for each word: first, a topic is chosen from the...

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