Adaptive Portfolio Management using Evolutionary Algorithm Essay

Adaptive Portfolio Management using Evolutionary Algorithm - Essay Example Introduction: Portfolio management is the process of managing assets i.e. stocks, bonds, etc., such that a large return with a low risk is obtained. Forecasting price movements in financial markets is an important part of constructing portfolios. Most traders believe that the financial markets are not fully efficient and that there exist temporary predictability, which could be exploited for collecting excess returns above the market average [1]. Consequently, many financial institutions have developed decision support systems to help traders and analysts make decisions about portfolio management more quickly and more effectively. Technical indicators use statistics to determine trends in security prices and are often used by financial markets and private traders to assist with portfolio management. A survey of foreign exchange traders in London [2] estimates that up to 90% of traders use some form of technical indicators and trading rules in their daily trading. Technical indicators assume that securities move according to trends and patterns that are continued over a short periods of time until another trend is triggered by the change in the market condition. The success of technical indicators depends on how one interprets the signals. Expert human traders are capable of combining several technical indicators and trading rules to arrive at composite strategies which are used in portfolio selection, execution and risk management. The process of arriving at such strategies requires high experience, expertise and often long and tidies hours of observation of historical and current market data to test and fine-tune different combinations of technical indicators and trading rules. Although there are agreements that financial markets do sometimes show periods where certain trading rules work [3], it is very hard to find evidence that a single trading strategy can function over an extended period of time. This can be due to the fact that financial markets are const antly evolving, and that when a trading rule is found to work it would not take long before it is exploited until it no longer harvests a significant profit. This forces the traders and technical analyst to constantly create new strategies or retune the existing strategies so that they would work under the new market conditions. The goal of my research would be to create a system that emulates human behaviour in combining a set of simple rules and technical indicators to create sophisticated trading strategies. The system then would constantly evolve those strategies or creating new strategies that would adapt to changing market conditions. 2. Motivation: In the past several years, there has been a notable increase in the use of financial modeling and optimization tools such as algorithmic trading and automated portfolio management in financial industries. In addition to the pressure on asset management firms to reduce costs and maintain a more stable and predictable performance in the aftermath of the downturn in the world’s markets in recent years, three other general trends have contributed to this increase. First, there has been an increase of interest in predictive models for asset returns. Predictive models assume that it is possible to make conditional forecasts of future returns—an objective that was previously considered not achievable by classical financial theory. Second, the wide availability of sophisticated and specialized software packages has enabled generating and exploiting

Historical relation between Islam, Christianity and Judaism Essay

Historical relation between Islam, Christianity and Judaism - Essay Example Religion helps to provide a driving force for every man’s existence on Earth – it is a belief of faith that people indulge in, in order to feel secure and protected in terms of their actions with relation to others around them. Islam, Christianity and Judaism are three of the world’s oldest religions, perhaps stemming and growing from each other initially as per historical evidences; however, today, the three have created a niche for themselves in the world with great followings of their own. It is said that Judaism was the backing that gave way to Christianity and Islam and that is why most of their teachings and beliefs are very much similar. The three religions share a stark relationship with each other in terms of their history with a connection between their messengers, texts and teachings. If checked properly, one can also notice the similarities between their rites and rituals, and how it is only different names and the use of different languages that sepa rates the three from each other. The commonality between the three is that each religion believes in its own God, and has put major emphasis on the higher supreme power that rules the faith. It is said that these Gods were the creators of heaven and hell, and of man’s existence on Earth, and that is why each religion has its own set of beliefs and laws for every man to dedicate his life to serving God.. Traditionally speaking, all three religions are bound by history because of their connection with Prophets like Abraham, Moses, Jesus and Muhammad. They each were the servants of their Gods, and came as messengers to people in order to reveal the truth about life that God imparted to them. Abraham gave his people the message provided to him by God, Moses provided the Israelis with the Ten Commandments, and Jesus was the harbinger of the teachings of God and Hebrew prophets. Finally, Muhammad is said to have combined the above messages of God and reject any kind of idolatry whi le simply establishing some required laws for the rest of humanity to follow. According to history, it is said that Judaism formed the roots of religion from which Islam and Christianity grew with the help of Messiahs. All three religions had their own Messiahs that delivered messages of truth and peace to the rest of their followers. While taking the literal meaning of the word ‘God’ into account, all three religions date back to their creations; The Hebrew word for God is ‘Elohim’ which in Arabic or Islam can be translated as, and means, ‘Allah’. Jews were said to come from Isaac, the son of Abraham, and the Arabs from Ishmael, another son of Abraham. According to this theory, all three religions were born out of the brainchild of a single God, despite having branched out into separate entities. Thus, all of mankind is a child of Abraham. On reading the holy books pertaining to each religion, i.e., the Holy Bible or the Qur’an, many hi storians as well as people specializing in theology have pointed out that the texts and readings of all religions contain the same teachings in different languages. The names of the Prophets are also strikingly similar, with a few changes in the pronunciation due to being spoken about and written in different languages and scripts. With respect to history, taken from a pragmatic point of view, there is only one God and his sons were the ones to have brought his message to the rest of mankind, and this was done by three different elements, thus leading to the creation of different religions. Judaism, Christianity and Islam, gradually developed into powerful tools used for the purpose of politics and monarchy in different countries, among different people. Preaching to the people became a widely known concept in the early centuries of the world, and more and more people began to take to power just in order to be able to gather mass following. This came as a threat to the identity and existence of the religions as the purpose of existence for