With the growth of computing power combined with the latest in artificial intelligence, machine learning, and now quantum assisted machine learning a quiet revolution is occurring that is changing the way we invest and trade. Using predictive analytics technology algorithms can now scan vast amounts of data to quickly identify trends and anomalies within financial markets and use those to make investment decisions. However, most investors are behind the game in terms of what they need to do to take advantage of this burgeoning opportunity.
Predictive analytics is the practice of extracting information from existing data sets to determine patterns and predict future outcomes and trends.
The potential for this is augmented by the rapidly increasing amount of data that is becoming available to investors. Nowadays, with the internet of things, it seems like anything that can be recorded is being recorded into structured and unstructured datasets.
Once the initial coding and fine tuning of the algorithms has been undertaken, the technology has now reached a point in that it can rapidly adapt to changing market conditions without human intervention. In a computing sense the system evolves.
For investment management firms to develop investment management approaches that incorporate AI and machine learning they need to:
- Be across the latest in artificial intelligence and machine learning technology that scans large public and proprietary data sets to predict future price trends across global financial markets;
- Partner with data scientists to develop cutting edge algorithms that learn and adapt to a continually changing investment market environment and to enable them to build investment portfolios that generate consistent risk adjusted performance returns; and
- Create an environment and culture that attracts the very best data science and technology talent to build and maintain a world class investment management capability.
Like anything new and unfamiliar it takes time for the investment community to adapt and become comfortable with new technologies. Once investors and traders have seen the benefits that predictive analytics using AI and machine learning can bring to their investment approach the technology will become more commonplace in investment markets.