Meta optimization and its application to portfolio selection

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Several data mining algorithms use iterative optimization methods for learning predictive models. It is not easy to determine upfront which optimization method will perform best or converge fast for such tasks. In this paper, we analyze Meta Algorithms (MAs) which work by adaptively combining iterates from a pool of base optimization algorithms. We show that the performance of MAs are competitive with the best convex combination of the iterates from the base algorithms for online as well as batch convex optimization problems. We illustrate the effectiveness of MAs on the problem of portfolio selection in the stock market and use several existing ideas for portfolio selection as base algorithms. Using daily S&P500 data for the past 21 years and a benchmark NYSE dataset, we show that MAs outperform existing portfolio selection algorithms with provable guarantees by several orders of magnitude, and match the performance of the best heuristics in the pool.

Original languageEnglish (US)
Title of host publicationProceedings of the 17th ACM SIGKDD International Conference on Knowledge Discovery and Data Mining, KDD'11
PublisherAssociation for Computing Machinery
Pages1163-1171
Number of pages9
ISBN (Print)9781450308137
DOIs
StatePublished - 2011
Externally publishedYes
Event17th ACM SIGKDD International Conference on Knowledge Discovery and Data Mining, KDD 2011 - San Diego, United States
Duration: Aug 21 2011Aug 24 2011

Publication series

NameProceedings of the ACM SIGKDD International Conference on Knowledge Discovery and Data Mining

Conference

Conference17th ACM SIGKDD International Conference on Knowledge Discovery and Data Mining, KDD 2011
Country/TerritoryUnited States
CitySan Diego
Period8/21/118/24/11

Keywords

  • Meta optimization
  • Online learning
  • Portfolio selection

ASJC Scopus subject areas

  • Software
  • Information Systems

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