Sentiment Analysis is new way of machine learning to extract opinion orientation (positive, negative, neutral) from a text segment written for any product, organization, person or any other entity. Sentiment Analysis can be used to predict the mood of people that have impact on stock prices, therefore it can help in prediction of actual stock movement. We evaluate Discover Financial prediction models with Ensemble Learning (ML) and Linear Regression1,2,3,4 and conclude that the DFS stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy DFS stock.

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

## Key Points

1. Is it better to buy and sell or hold?
2. Prediction Modeling
3. Probability Distribution ## DFS Target Price Prediction Modeling Methodology

The classical linear multi-factor stock selection model is widely used for long-term stock price trend prediction. However, the stock market is chaotic, complex, and dynamic, for which reasons the linear model assumption may be unreasonable, and it is more meaningful to construct a better-integrated stock selection model based on different feature selection and nonlinear stock price trend prediction methods. We consider Discover Financial Stock Decision Process with Linear Regression where A is the set of discrete actions of DFS 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(Linear Regression)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(Ensemble Learning (ML)) X S(n):→ (n+3 month) $∑ i = 1 n a i$

n:Time series to forecast

p:Price signals of DFS 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?

## DFS Stock Forecast (Buy or Sell) for (n+3 month)

Sample Set: Neural Network
Stock/Index: DFS Discover Financial
Time series to forecast n: 09 Oct 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy DFS 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

Discover Financial assigned short-term Ba3 & long-term Baa2 forecasted stock rating. We evaluate the prediction models Ensemble Learning (ML) with Linear Regression1,2,3,4 and conclude that the DFS stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy DFS stock.

### Financial State Forecast for DFS Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3Baa2
Operational Risk 7569
Market Risk8055
Technical Analysis7580
Fundamental Analysis4584
Risk Unsystematic5475

### Prediction Confidence Score

Trust metric by Neural Network: 92 out of 100 with 780 signals.

## References

1. Athey S. 2017. Beyond prediction: using big data for policy problems. Science 355:483–85
2. Rosenbaum PR, Rubin DB. 1983. The central role of the propensity score in observational studies for causal effects. Biometrika 70:41–55
3. Bessler, D. A. S. W. Fuller (1993), "Cointegration between U.S. wheat markets," Journal of Regional Science, 33, 481–501.
4. Holland PW. 1986. Statistics and causal inference. J. Am. Stat. Assoc. 81:945–60
5. H. Khalil and J. Grizzle. Nonlinear systems, volume 3. Prentice hall Upper Saddle River, 2002.
6. Harris ZS. 1954. Distributional structure. Word 10:146–62
7. E. Altman, K. Avrachenkov, and R. N ́u ̃nez-Queija. Perturbation analysis for denumerable Markov chains with application to queueing models. Advances in Applied Probability, pages 839–853, 2004
Frequently Asked QuestionsQ: What is the prediction methodology for DFS stock?
A: DFS stock prediction methodology: We evaluate the prediction models Ensemble Learning (ML) and Linear Regression
Q: Is DFS stock a buy or sell?
A: The dominant strategy among neural network is to Buy DFS Stock.
Q: Is Discover Financial stock a good investment?
A: The consensus rating for Discover Financial is Buy and assigned short-term Ba3 & long-term Baa2 forecasted stock rating.
Q: What is the consensus rating of DFS stock?
A: The consensus rating for DFS is Buy.
Q: What is the prediction period for DFS stock?
A: The prediction period for DFS is (n+3 month)