It has never been easy to invest in a set of assets, the abnormally of financial market does not allow simple models to predict future asset values with higher accuracy. Machine learning, which consist of making computers perform tasks that normally requiring human intelligence is currently the dominant trend in scientific research. This article aims to build a model using Recurrent Neural Networks (RNN) and especially Long-Short Term Memory model (LSTM) to predict future stock market values. We evaluate Starbucks prediction models with Reinforcement Machine Learning (ML) and Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the SBUX stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold SBUX stock.

Keywords: SBUX, Starbucks, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. Prediction Modeling
2. What is prediction model?
3. What is Markov decision process in reinforcement learning?

SBUX Target Price Prediction Modeling Methodology

Finance is one of the pioneering industries that started using Machine Learning (ML), a subset of Artificial Intelligence (AI) in the early 80s for market prediction. Since then, major firms and hedge funds have adopted machine learning for stock prediction, portfolio optimization, credit lending, stock betting, etc. In this paper, we survey all the different approaches of machine learning that can be incorporated in applied finance. We consider Starbucks Stock Decision Process with Wilcoxon Rank-Sum Test where A is the set of discrete actions of SBUX stock holders, F is the set of discrete states, P : S × F × S → R is the transition probability distribution, R : S × F → R is the reaction function, and γ ∈ [0, 1] is a move factor for expectation.1,2,3,4

F(Wilcoxon Rank-Sum Test)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Reinforcement Machine Learning (ML)) X S(n):→ (n+4 weeks) $\stackrel{\to }{R}=\left({r}_{1},{r}_{2},{r}_{3}\right)$

n:Time series to forecast

p:Price signals of SBUX stock

j:Nash equilibria

k:Dominated move

a:Best response for target price

For further technical information as per how our model work we invite you to visit the article below:

How do AC Investment Research machine learning (predictive) algorithms actually work?

SBUX Stock Forecast (Buy or Sell) for (n+4 weeks)

Sample Set: Neural Network
Stock/Index: SBUX Starbucks
Time series to forecast n: 18 Sep 2022 for (n+4 weeks)

According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold SBUX stock.

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Yellow to Green): *Technical Analysis%

Conclusions

Starbucks assigned short-term B1 & long-term B2 forecasted stock rating. We evaluate the prediction models Reinforcement Machine Learning (ML) with Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the SBUX stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold SBUX stock.

Financial State Forecast for SBUX Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1B2
Operational Risk 8050
Market Risk7234
Technical Analysis6475
Fundamental Analysis4041
Risk Unsystematic5372

Prediction Confidence Score

Trust metric by Neural Network: 85 out of 100 with 690 signals.

References

1. J. Z. Leibo, V. Zambaldi, M. Lanctot, J. Marecki, and T. Graepel. Multi-agent Reinforcement Learning in Sequential Social Dilemmas. In Proceedings of the 16th International Conference on Autonomous Agents and Multiagent Systems (AAMAS 2017), Sao Paulo, Brazil, 2017
2. Breiman L. 1993. Better subset selection using the non-negative garotte. Tech. Rep., Univ. Calif., Berkeley
3. Athey S, Tibshirani J, Wager S. 2016b. Generalized random forests. arXiv:1610.01271 [stat.ME]
4. Jacobs B, Donkers B, Fok D. 2014. Product Recommendations Based on Latent Purchase Motivations. Rotterdam, Neth.: ERIM
5. A. K. Agogino and K. Tumer. Analyzing and visualizing multiagent rewards in dynamic and stochastic environments. Journal of Autonomous Agents and Multi-Agent Systems, 17(2):320–338, 2008
6. Friedman JH. 2002. Stochastic gradient boosting. Comput. Stat. Data Anal. 38:367–78
7. Abadie A, Cattaneo MD. 2018. Econometric methods for program evaluation. Annu. Rev. Econ. 10:465–503
Frequently Asked QuestionsQ: What is the prediction methodology for SBUX stock?
A: SBUX stock prediction methodology: We evaluate the prediction models Reinforcement Machine Learning (ML) and Wilcoxon Rank-Sum Test
Q: Is SBUX stock a buy or sell?
A: The dominant strategy among neural network is to Hold SBUX Stock.
Q: Is Starbucks stock a good investment?
A: The consensus rating for Starbucks is Hold and assigned short-term B1 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of SBUX stock?
A: The consensus rating for SBUX is Hold.
Q: What is the prediction period for SBUX stock?
A: The prediction period for SBUX is (n+4 weeks)

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