Artificial intelligence and machine learning is revolutionizing the hedge fund industry. Here’s what you need to know.
Machine Learning is a growing and diverse field of Artificial Intelligence which studies algorithms that are capable of automatically learning from data and making predictions based on data. Machine learning is one of the most exciting technological areas of study today. Each week there are new advancements, new technologies, new applications, and new opportunities. It’s inspiring, but also overwhelming. That’s why I created this guide to help you keep pace with all these exciting developments. Whether you’re currently employed in the hedge fund industry, or just pursuing an interest in the subject, or working with us at Produvia, there will always be something here to inspire you!
Here are a few ways artificial intelligence and machine learning can be used in the hedge fund industry.
AI In Industry
- Man Group uses machine learning to make trading predictions by analyzing exposure caps, asset class, volatility, trading costs. They also find the fastest way to execute trades, to make bets on market momentum, and to scan press releases and financial reports for keywords that could signal that a stock will rise or fall (Bloomberg, 2017)
- Two Sigma is using machine learning and artificial intelligence to find investment opportunities (Business Insider, 2017)
- Aidyia uses artificial intelligence to identify patterns and predict price movements in financial markets (Wired, 2016)
- Binatix uses machine learning algorithms to spot patterns that offer an edge in investing (Recode, 2014)
- Pit.ai is using a variant of reinforcement learning to evaluate trading strategies (TechCrunch, 2017)
- Sentient Technologies uses machine learning to trade U.S. stocks (Bloomberg, 2017)
- Walnut Algorithms is using machine learning to automate investment strategies on multiple timeframes (from high frequency to yearly trend following) (DataConomy, 2017)
- Bridgewater Associates is developing artificial intelligence to automate the day-to-day management of the firm, including hiring, firing, promotions, and other decision-making. The software ranks opposing perspectives from multiple team members when there’s a disagreement. The system is taking input, including peer reviews and employee testing, and uses them to assign employees to specific tasks and provide them with detailed instructions for approaches and time management. (WSJ, 2016)
AI Case Studies
- Man Group used machine learning to increase assets under management by 77% and increase it’s AHL Dimension fund by 400% over a three year period (Bloomberg, 2017)
If you have any questions about artificial intelligence and it’s application in hedge funds, feel free to message us at produvia.com
Artificial Intelligence (AI) in Hedge Funds was originally published in Produvia Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.