Should You Buy, Sell, or Hold? (XYL Stock Forecast)

Xylem Research Report

Summary

The presented paper modeled and predicted stock returns using LSTM. The historical data of stock market were transformed into 30-days-long sequences with 10 learning features and 7-day earning rate labeling. The model was fitted by training on 1200000 sequences and tested using the other 350000 sequences. We evaluate Xylem prediction models with Inductive Learning (ML) and Statistical Hypothesis Testing1,2,3,4 and conclude that the XYL stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy XYL stock.

Key Points

  1. Market Signals
  2. Market Signals
  3. Can we predict stock market using machine learning?

XYL Target Price Prediction Modeling Methodology

We consider Xylem Stock Decision Process with Inductive Learning (ML) where A is the set of discrete actions of XYL 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(Statistical Hypothesis Testing)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(Inductive Learning (ML)) X S(n):→ (n+8 weeks) r s rs

n:Time series to forecast

p:Price signals of XYL stock

j:Nash equilibria (Neural Network)

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?

XYL Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: XYL Xylem
Time series to forecast n: 20 Nov 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy XYL 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 Xylem

  1. Adjusting the hedge ratio by increasing the volume of the hedging instrument does not affect how the changes in the value of the hedged item are measured. The measurement of the changes in the fair value of the hedging instrument related to the previously designated volume also remains unaffected. However, from the date of rebalancing, the changes in the fair value of the hedging instrument also include the changes in the value of the additional volume of the hedging instrument. The changes are measured starting from, and by reference to, the date of rebalancing instead of the date on which the hedging relationship was designated. For example, if an entity originally hedged the price risk of a commodity using a derivative volume of 100 tonnes as the hedging instrument and added a volume of 10 tonnes on rebalancing, the hedging instrument after rebalancing would comprise a total derivative volume of 110 tonnes. The change in the fair value of the hedging instrument is the total change in the fair value of the derivatives that make up the total volume of 110 tonnes. These derivatives could (and probably would) have different critical terms, such as their forward rates, because they were entered into at different points in time (including the possibility of designating derivatives into hedging relationships after their initial recognition).
  2. However, the designation of the hedging relationship using the same hedge ratio as that resulting from the quantities of the hedged item and the hedging instrument that the entity actually uses shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument that would in turn create hedge ineffectiveness (irrespective of whether recognised or not) that could result in an accounting outcome that would be inconsistent with the purpose of hedge accounting. Hence, for the purpose of designating a hedging relationship, an entity must adjust the hedge ratio that results from the quantities of the hedged item and the hedging instrument that the entity actually uses if that is needed to avoid such an imbalance
  3. If a financial instrument is designated in accordance with paragraph 6.7.1 as measured at fair value through profit or loss after its initial recognition, or was previously not recognised, the difference at the time of designation between the carrying amount, if any, and the fair value shall immediately be recognised in profit or loss. For financial assets measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A, the cumulative gain or loss previously recognised in other comprehensive income shall immediately be reclassified from equity to profit or loss as a reclassification adjustment.
  4. When applying the effective interest method, an entity generally amortises any fees, points paid or received, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate over the expected life of the financial instrument. However, a shorter period is used if this is the period to which the fees, points paid or received, transaction costs, premiums or discounts relate. This will be the case when the variable to which the fees, points paid or received, transaction costs, premiums or discounts relate is repriced to market rates before the expected maturity of the financial instrument. In such a case, the appropriate amortisation period is the period to the next such repricing date. For example, if a premium or discount on a floating-rate financial instrument reflects the interest that has accrued on that financial instrument since the interest was last paid, or changes in the market rates since the floating interest rate was reset to the market rates, it will be amortised to the next date when the floating interest is reset to market rates. This is because the premium or discount relates to the period to the next interest reset date because, at that date, the variable to which the premium or discount relates (ie interest rates) is reset to the market rates. If, however, the premium or discount results from a change in the credit spread over the floating rate specified in the financial instrument, or other variables that are not reset to the market rates, it is amortised over the expected life of the financial instrument.

*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

Xylem assigned short-term B2 & long-term B3 forecasted stock rating. We evaluate the prediction models Inductive Learning (ML) with Statistical Hypothesis Testing1,2,3,4 and conclude that the XYL stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy XYL stock.

Financial State Forecast for XYL Xylem Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2B3
Operational Risk 7344
Market Risk7354
Technical Analysis3339
Fundamental Analysis3252
Risk Unsystematic6648

Prediction Confidence Score

Trust metric by Neural Network: 74 out of 100 with 743 signals.

References

  1. Bewley, R. M. Yang (1998), "On the size and power of system tests for cointegration," Review of Economics and Statistics, 80, 675–679.
  2. Barkan O. 2016. Bayesian neural word embedding. arXiv:1603.06571 [math.ST]
  3. Athey S, Wager S. 2017. Efficient policy learning. arXiv:1702.02896 [math.ST]
  4. Rosenbaum PR, Rubin DB. 1983. The central role of the propensity score in observational studies for causal effects. Biometrika 70:41–55
  5. R. Sutton and A. Barto. Reinforcement Learning. The MIT Press, 1998
  6. Imai K, Ratkovic M. 2013. Estimating treatment effect heterogeneity in randomized program evaluation. Ann. Appl. Stat. 7:443–70
  7. Hastie T, Tibshirani R, Tibshirani RJ. 2017. Extended comparisons of best subset selection, forward stepwise selection, and the lasso. arXiv:1707.08692 [stat.ME]
Frequently Asked QuestionsQ: What is the prediction methodology for XYL stock?
A: XYL stock prediction methodology: We evaluate the prediction models Inductive Learning (ML) and Statistical Hypothesis Testing
Q: Is XYL stock a buy or sell?
A: The dominant strategy among neural network is to Buy XYL Stock.
Q: Is Xylem stock a good investment?
A: The consensus rating for Xylem is Buy and assigned short-term B2 & long-term B3 forecasted stock rating.
Q: What is the consensus rating of XYL stock?
A: The consensus rating for XYL is Buy.
Q: What is the prediction period for XYL stock?
A: The prediction period for XYL is (n+8 weeks)

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