Outlook: Bank of Montreal assigned short-term Ba1 & long-term Ba1 estimated rating.
Time series to forecast n: 21 Dec 2022 for (n+8 weeks)
Methodology : Statistical Inference (ML)

## Abstract

Prediction of the trend of the stock market is very crucial. If someone has robust forecasting tools, then he/she will increase the return on investment and can get rich easily and quickly. Because there are a lot of factors that can influence the stock market, the stock forecasting problem has always been very complicated. Support Vector Regression is a tool from machine learning that can build a regression model on the historical time series data in the purpose of predicting the future trend of the stock price.(Sen, J. and Chaudhuri, T.D., 2018, December. Stock price prediction using machine learning and deep learning frameworks. In Proceedings of the 6th International Conference on Business Analytics and Intelligence, Bangalore, India (pp. 20-22).) We evaluate Bank of Montreal prediction models with Statistical Inference (ML) and Paired T-Test1,2,3,4 and conclude that the BMO:TSX stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period, the dominant strategy among neural network is: Buy

## Key Points

1. How do you decide buy or sell a stock?
2. Reaction Function
3. What is prediction model?

## BMO:TSX Target Price Prediction Modeling Methodology

We consider Bank of Montreal Decision Process with Statistical Inference (ML) where A is the set of discrete actions of BMO:TSX 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(Paired T-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(Statistical Inference (ML)) X S(n):→ (n+8 weeks) $\stackrel{\to }{S}=\left({s}_{1},{s}_{2},{s}_{3}\right)$

n:Time series to forecast

p:Price signals of BMO:TSX 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?

## BMO:TSX Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: BMO:TSX Bank of Montreal
Time series to forecast n: 21 Dec 2022 for (n+8 weeks)

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

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 (Grey to Black): *Technical Analysis%

## IFRS Reconciliation Adjustments for Bank of Montreal

1. Subject to the conditions in paragraphs 4.1.5 and 4.2.2, this Standard allows an entity to designate a financial asset, a financial liability, or a group of financial instruments (financial assets, financial liabilities or both) as at fair value through profit or loss provided that doing so results in more relevant information.
2. The requirement that an economic relationship exists means that the hedging instrument and the hedged item have values that generally move in the opposite direction because of the same risk, which is the hedged risk. Hence, there must be an expectation that the value of the hedging instrument and the value of the hedged item will systematically change in response to movements in either the same underlying or underlyings that are economically related in such a way that they respond in a similar way to the risk that is being hedged (for example, Brent and WTI crude oil).
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. If, in applying paragraph 7.2.44, an entity reinstates a discontinued hedging relationship, the entity shall read references in paragraphs 6.9.11 and 6.9.12 to the date the alternative benchmark rate is designated as a noncontractually specified risk component for the first time as referring to the date of initial application of these amendments (ie the 24-month period for that alternative benchmark rate designated as a non-contractually specified risk component begins from the date of initial application of these amendments).

*International Financial Reporting Standards (IFRS) adjustment process involves reviewing the company's financial statements and identifying any differences between the company's current accounting practices and the requirements of the IFRS. If there are any such differences, neural network makes adjustments to financial statements to bring them into compliance with the IFRS.

## Conclusions

Bank of Montreal assigned short-term Ba1 & long-term Ba1 estimated rating. We evaluate the prediction models Statistical Inference (ML) with Paired T-Test1,2,3,4 and conclude that the BMO:TSX stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period, the dominant strategy among neural network is: Buy

### BMO:TSX Bank of Montreal Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementCB2
Balance SheetBaa2B1
Leverage RatiosBa1Ba3
Cash FlowB3Caa2
Rates of Return and ProfitabilityBa3C

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

### Prediction Confidence Score

Trust metric by Neural Network: 86 out of 100 with 573 signals.

## References

1. Mnih A, Kavukcuoglu K. 2013. Learning word embeddings efficiently with noise-contrastive estimation. In Advances in Neural Information Processing Systems, Vol. 26, ed. Z Ghahramani, M Welling, C Cortes, ND Lawrence, KQ Weinberger, pp. 2265–73. San Diego, CA: Neural Inf. Process. Syst. Found.
2. Belsley, D. A. (1988), "Modelling and forecast reliability," International Journal of Forecasting, 4, 427–447.
3. Doudchenko N, Imbens GW. 2016. Balancing, regression, difference-in-differences and synthetic control methods: a synthesis. NBER Work. Pap. 22791
4. Hastie T, Tibshirani R, Wainwright M. 2015. Statistical Learning with Sparsity: The Lasso and Generalizations. New York: CRC Press
5. Vapnik V. 2013. The Nature of Statistical Learning Theory. Berlin: Springer
6. Vapnik V. 2013. The Nature of Statistical Learning Theory. Berlin: Springer
7. M. Sobel. The variance of discounted Markov decision processes. Applied Probability, pages 794–802, 1982
Frequently Asked QuestionsQ: What is the prediction methodology for BMO:TSX stock?
A: BMO:TSX stock prediction methodology: We evaluate the prediction models Statistical Inference (ML) and Paired T-Test
Q: Is BMO:TSX stock a buy or sell?
A: The dominant strategy among neural network is to Buy BMO:TSX Stock.
Q: Is Bank of Montreal stock a good investment?
A: The consensus rating for Bank of Montreal is Buy and assigned short-term Ba1 & long-term Ba1 estimated rating.
Q: What is the consensus rating of BMO:TSX stock?
A: The consensus rating for BMO:TSX is Buy.
Q: What is the prediction period for BMO:TSX stock?
A: The prediction period for BMO:TSX is (n+8 weeks)