FITB Options & Futures Prediction

In this paper we investigate ways to use prior knowledge and neural networks to improve multivariate prediction ability. Daily stock prices are predicted as a complicated real-world problem, taking non-numerical factors such as political and international events are into account. We have studied types of prior knowledge which are difficult to insert into initial network structures or to represent in the form of error measurements. We evaluate Fifth Third Bank prediction models with Modular Neural Network (Emotional Trigger/Responses Analysis) and Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the FITB 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 FITB stock.


Keywords: FITB, Fifth Third Bank, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Understanding Buy, Sell, and Hold Ratings
  2. Prediction Modeling
  3. Game Theory

FITB Target Price Prediction Modeling Methodology

Neural networks (NNs), as artificial intelligence (AI) methods, have become very important in making stock market predictions. Much research on the applications of NNs for solving business problems have proven their advantages over statistical and other methods that do not include AI, although there is no optimal methodology for a certain problem. We consider Fifth Third Bank Stock Decision Process with Wilcoxon Rank-Sum Test where A is the set of discrete actions of FITB 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= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Modular Neural Network (Emotional Trigger/Responses Analysis)) X S(n):→ (n+4 weeks) e x rx

n:Time series to forecast

p:Price signals of FITB 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?

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


Sample Set: Neural Network
Stock/Index: FITB Fifth Third Bank
Time series to forecast n: 14 Nov 2022 for (n+4 weeks)

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

Adjusted IFRS* Prediction Methods for Fifth Third Bank

  1. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss. If such a mismatch would not be created or enlarged, the entity is required to present the effects of changes in the liability's credit risk in other comprehensive income.
  2. When using historical credit loss experience in estimating expected credit losses, it is important that information about historical credit loss rates is applied to groups that are defined in a manner that is consistent with the groups for which the historical credit loss rates were observed. Consequently, the method used shall enable each group of financial assets to be associated with information about past credit loss experience in groups of financial assets with similar risk characteristics and with relevant observable data that reflects current conditions.
  3. In some cases, the qualitative and non-statistical quantitative information available may be sufficient to determine that a financial instrument has met the criterion for the recognition of a loss allowance at an amount equal to lifetime expected credit losses. That is, the information does not need to flow through a statistical model or credit ratings process in order to determine whether there has been a significant increase in the credit risk of the financial instrument. In other cases, an entity may need to consider other information, including information from its statistical models or credit ratings processes.
  4. Because the hedge accounting model is based on a general notion of offset between gains and losses on the hedging instrument and the hedged item, hedge effectiveness is determined not only by the economic relationship between those items (ie the changes in their underlyings) but also by the effect of credit risk on the value of both the hedging instrument and the hedged item. The effect of credit risk means that even if there is an economic relationship between the hedging instrument and the hedged item, the level of offset might become erratic. This can result from a change in the credit risk of either the hedging instrument or the hedged item that is of such a magnitude that the credit risk dominates the value changes that result from the economic relationship (ie the effect of the changes in the underlyings). A level of magnitude that gives rise to dominance is one that would result in the loss (or gain) from credit risk frustrating the effect of changes in the underlyings on the value of the hedging instrument or the hedged item, even if those changes were significant.

*International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable around the world.

Conclusions

Fifth Third Bank assigned short-term B2 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) with Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the FITB 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 FITB stock.

Financial State Forecast for FITB Fifth Third Bank Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2B1
Operational Risk 8954
Market Risk4786
Technical Analysis3466
Fundamental Analysis5846
Risk Unsystematic3231

Prediction Confidence Score

Trust metric by Neural Network: 90 out of 100 with 810 signals.

References

  1. E. Collins. Using Markov decision processes to optimize a nonlinear functional of the final distribution, with manufacturing applications. In Stochastic Modelling in Innovative Manufacturing, pages 30–45. Springer, 1997
  2. Miller A. 2002. Subset Selection in Regression. New York: CRC Press
  3. Bamler R, Mandt S. 2017. Dynamic word embeddings via skip-gram filtering. In Proceedings of the 34th Inter- national Conference on Machine Learning, pp. 380–89. La Jolla, CA: Int. Mach. Learn. Soc.
  4. Y. Chow and M. Ghavamzadeh. Algorithms for CVaR optimization in MDPs. In Advances in Neural Infor- mation Processing Systems, pages 3509–3517, 2014.
  5. Thompson WR. 1933. On the likelihood that one unknown probability exceeds another in view of the evidence of two samples. Biometrika 25:285–94
  6. Scott SL. 2010. A modern Bayesian look at the multi-armed bandit. Appl. Stoch. Models Bus. Ind. 26:639–58
  7. Burgess, D. F. (1975), "Duality theory and pitfalls in the specification of technologies," Journal of Econometrics, 3, 105–121.
Frequently Asked QuestionsQ: What is the prediction methodology for FITB stock?
A: FITB stock prediction methodology: We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) and Wilcoxon Rank-Sum Test
Q: Is FITB stock a buy or sell?
A: The dominant strategy among neural network is to Hold FITB Stock.
Q: Is Fifth Third Bank stock a good investment?
A: The consensus rating for Fifth Third Bank is Hold and assigned short-term B2 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of FITB stock?
A: The consensus rating for FITB is Hold.
Q: What is the prediction period for FITB stock?
A: The prediction period for FITB is (n+4 weeks)

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