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Python for Finance Cookbook – Second Edition

You're reading from   Python for Finance Cookbook – Second Edition Over 80 powerful recipes for effective financial data analysis

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Product type Paperback
Published in Dec 2022
Publisher Packt
ISBN-13 9781803243191
Length 740 pages
Edition 2nd Edition
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Author (1):
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Eryk Lewinson Eryk Lewinson
Author Profile Icon Eryk Lewinson
Eryk Lewinson
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Table of Contents (18) Chapters Close

Preface 1. Acquiring Financial Data 2. Data Preprocessing FREE CHAPTER 3. Visualizing Financial Time Series 4. Exploring Financial Time Series Data 5. Technical Analysis and Building Interactive Dashboards 6. Time Series Analysis and Forecasting 7. Machine Learning-Based Approaches to Time Series Forecasting 8. Multi-Factor Models 9. Modeling Volatility with GARCH Class Models 10. Monte Carlo Simulations in Finance 11. Asset Allocation 12. Backtesting Trading Strategies 13. Applied Machine Learning: Identifying Credit Default 14. Advanced Concepts for Machine Learning Projects 15. Deep Learning in Finance 16. Other Books You May Enjoy
17. Index

Exploring explainable AI techniques

In one of the previous recipes, we looked into feature importance as one of the means of getting a better understanding of how the models work under the hood. While this might be quite a simple task in the case of linear regression, it gets increasingly difficult with the complexity of the models.

One of the big trends in the ML/DL field is explainable AI (XAI). It refers to various techniques that allow us to better understand the predictions of black box models. While the current XAI approaches will not turn a black box model into a fully interpretable one (or a white box), they will definitely help us better understand why the model returns certain predictions for a given set of features.

Some of the benefits of having explainable AI models are as follows:

  • Builds trust in the model—if the model’s reasoning (via its explanation) matches common sense or the beliefs of human experts, it can strengthen the trust in...
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