Modelling A.I. in Economics

ERIE Stock: Is This the End of the Bull Market? (Forecast)

Outlook: Erie Indemnity Company Class A Common Stock is assigned short-term Ba3 & long-term Baa2 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Sell
Time series to forecast n: for Weeks2
Methodology : Modular Neural Network (Market Direction Analysis)
Hypothesis Testing : Linear Regression
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.


Summary

Erie Indemnity Company Class A Common Stock prediction model is evaluated with Modular Neural Network (Market Direction Analysis) and Linear Regression1,2,3,4 and it is concluded that the ERIE stock is predictable in the short/long term. Modular neural networks (MNNs) are a type of artificial neural network that can be used for market direction analysis. MNNs are made up of multiple smaller neural networks, called modules. Each module is responsible for learning a specific task, such as identifying patterns in data or predicting future price movements. The modules are then combined to form a single neural network that can perform multiple tasks.In the context of market direction analysis, MNNs can be used to identify patterns in market data that suggest that the market is likely to move in a particular direction. This information can then be used to make predictions about future price movements.5 According to price forecasts for 8 Weeks period, the dominant strategy among neural network is: Sell

Graph 28

Key Points

  1. Modular Neural Network (Market Direction Analysis) for ERIE stock price prediction process.
  2. Linear Regression
  3. Market Risk
  4. Decision Making
  5. What statistical methods are used to analyze data?

ERIE Stock Price Forecast

We consider Erie Indemnity Company Class A Common Stock Decision Process with Modular Neural Network (Market Direction Analysis) where A is the set of discrete actions of ERIE 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


Sample Set: Neural Network
Stock/Index: ERIE Erie Indemnity Company Class A Common Stock
Time series to forecast: 8 Weeks

According to price forecasts, the dominant strategy among neural network is: Sell


F(Linear Regression)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 (Market Direction Analysis)) X S(n):→ 8 Weeks e x rx

n:Time series to forecast

p:Price signals of ERIE stock

j:Nash equilibria (Neural Network)

k:Dominated move of ERIE stock holders

a:Best response for ERIE target price


Modular neural networks (MNNs) are a type of artificial neural network that can be used for market direction analysis. MNNs are made up of multiple smaller neural networks, called modules. Each module is responsible for learning a specific task, such as identifying patterns in data or predicting future price movements. The modules are then combined to form a single neural network that can perform multiple tasks.In the context of market direction analysis, MNNs can be used to identify patterns in market data that suggest that the market is likely to move in a particular direction. This information can then be used to make predictions about future price movements.5 In statistics, linear regression is a method for estimating the relationship between a dependent variable and one or more independent variables. The dependent variable is the variable that is being predicted, and the independent variables are the variables that are used to predict the dependent variable. Linear regression assumes that the relationship between the dependent variable and the independent variables is linear. This means that the dependent variable can be represented as a straight line function of the independent variables.6,7

 

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

How do PredictiveAI algorithms actually work?

ERIE Stock Forecast (Buy or Sell) Strategic Interaction Table

Strategic Interaction Table Legend:

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%

Financial Data Adjustments for Modular Neural Network (Market Direction Analysis) based ERIE Stock Prediction Model

  1. An entity may manage and evaluate the performance of a group of financial liabilities or financial assets and financial liabilities in such a way that measuring that group at fair value through profit or loss results in more relevant information. The focus in this instance is on the way the entity manages and evaluates performance, instead of on the nature of its financial instruments.
  2. For example, an entity may use this condition to designate financial liabilities as at fair value through profit or loss if it meets the principle in paragraph 4.2.2(b) and the entity has financial assets and financial liabilities that share one or more risks and those risks are managed and evaluated on a fair value basis in accordance with a documented policy of asset and liability management. An example could be an entity that has issued 'structured products' containing multiple embedded derivatives and manages the resulting risks on a fair value basis using a mix of derivative and non-derivative financial instruments
  3. If a guarantee provided by an entity to pay for default losses on a transferred asset prevents the transferred asset from being derecognised to the extent of the continuing involvement, the transferred asset at the date of the transfer is measured at the lower of (i) the carrying amount of the asset and (ii) the maximum amount of the consideration received in the transfer that the entity could be required to repay ('the guarantee amount'). The associated liability is initially measured at the guarantee amount plus the fair value of the guarantee (which is normally the consideration received for the guarantee). Subsequently, the initial fair value of the guarantee is recognised in profit or loss when (or as) the obligation is satisfied (in accordance with the principles of IFRS 15) and the carrying value of the asset is reduced by any loss allowance.
  4. The definition of a derivative refers to non-financial variables that are not specific to a party to the contract. These include an index of earthquake losses in a particular region and an index of temperatures in a particular city. Non-financial variables specific to a party to the contract include the occurrence or non-occurrence of a fire that damages or destroys an asset of a party to the contract. A change in the fair value of a non-financial asset is specific to the owner if the fair value reflects not only changes in market prices for such assets (a financial variable) but also the condition of the specific non-financial asset held (a non-financial variable). For example, if a guarantee of the residual value of a specific car exposes the guarantor to the risk of changes in the car's physical condition, the change in that residual value is specific to the owner of the car.

*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.

ERIE Erie Indemnity Company Class A Common Stock Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba3Baa2
Income StatementB1Baa2
Balance SheetB2Baa2
Leverage RatiosBa2B2
Cash FlowB3Caa2
Rates of Return and ProfitabilityBaa2Baa2

*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?

References

  1. Jorgenson, D.W., Weitzman, M.L., ZXhang, Y.X., Haxo, Y.M. and Mat, Y.X., 2023. Can Neural Networks Predict Stock Market?. AC Investment Research Journal, 220(44).
  2. Sutton RS, Barto AG. 1998. Reinforcement Learning: An Introduction. Cambridge, MA: MIT Press
  3. Swaminathan A, Joachims T. 2015. Batch learning from logged bandit feedback through counterfactual risk minimization. J. Mach. Learn. Res. 16:1731–55
  4. Morris CN. 1983. Parametric empirical Bayes inference: theory and applications. J. Am. Stat. Assoc. 78:47–55
  5. 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
  6. Bai J, Ng S. 2017. Principal components and regularized estimation of factor models. arXiv:1708.08137 [stat.ME]
  7. Vapnik V. 2013. The Nature of Statistical Learning Theory. Berlin: Springer
Frequently Asked QuestionsQ: Is ERIE stock expected to rise?
A: ERIE stock prediction model is evaluated with Modular Neural Network (Market Direction Analysis) and Linear Regression and it is concluded that dominant strategy for ERIE stock is Sell
Q: Is ERIE stock a buy or sell?
A: The dominant strategy among neural network is to Sell ERIE Stock.
Q: Is Erie Indemnity Company Class A Common Stock stock a good investment?
A: The consensus rating for Erie Indemnity Company Class A Common Stock is Sell and is assigned short-term Ba3 & long-term Baa2 estimated rating.
Q: What is the consensus rating of ERIE stock?
A: The consensus rating for ERIE is Sell.
Q: What is the forecast for ERIE stock?
A: ERIE target price forecast: Sell

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