I Know First Evaluation Report for S&P 500 Index
Executive Summary
In this forecast evaluation report, we will examine the performance of the forecasts generated by the I Know First AI Algorithm for the S&P 500 Index with time horizons ranging from 3 days to 3 months, which were delivered daily to our clients. Our analysis covers the time period from the 1st of January 2019 to 19th of June 2019. Below, we present our key takeaways for checking hit ratios of our predictions.
Highlights:
- 75% Hit Ratio for 14-day time period of S&P 500 predictions allowing our clients to be able to invest their money with significant less risk
- Predictions consistently above 60% accurate despite very volatile times in the world economy over the last half year
Note that the above results were obtained as a result of an evaluation conducted over the specific time period to give a presentation for the S&P 500 movements. The following report provides an extensive explanation of our methodology and detailed analysis of the performance metrics that we obtained during the evaluation. This report is a new I Know First evaluation series illustrating the ability to provide successful forecasting on the S&P 500 Index.
About the I Know First Algorithm
The I Know First self-learning algorithm analyses, models, and predicts the capital market, including stocks, bonds, currencies, commodities and interest rates. The algorithm is based on Artificial Intelligence (AI) and Machine Learning (ML) and incorporates elements of Artificial Neural Networks and Genetic Algorithms.
The system outputs the predicted trend as a number, positive or negative, along with a wave chart that predicts how the waves will overlap with the predicted trend. Consequently, the trader can decide which direction to trade, when to enter the trade, and when to exit the trade. The model is 100% empirical, based only on factual data, thereby avoiding any biases or emotions that may accompany human assumptions. I Know First’s model only involves the human factor in building the mathematical framework and providing the initial set of inputs and outputs to the system. The algorithm produces a forecast with a signal and a predictability indicator. The signal is the number in the middle of the box. The predictability is the number at the bottom of the box. At the top, a specific asset is identified. This format is consistent across all predictions.
Our algorithm provides two independent indicators for the index – signal and predictability.
The signal is the predicted strength and direction of movement of the index. This is measured from –inf to +inf.
The predictability indicates our confidence in the signal. The predictability is a Pearson correlation coefficient relating to past algorithmic performance and actual market movement, measured from -1 to 1. You can find a detailed description of our heatmap here
The Hit Ratio Calculation
The hit ratio helps us to identify the accuracy of our algorithm’s predictions.
We predict the direction of movement of the S&P 500 Index using our algorithm. Our predictions are then compared against actual movements of the S&P 500 within the same time horizon.
The hit ratio is then calculated as follows:
S&P 500
When thinking of index funds as benchmarks for the whole economy, many experts tend to gravitate towards checking the S&P 500. This prominent index, followed by millions throughout the globe, has historically shined a light on the movements in the stock market. What the index does, in essence, is choose the 500 largest publicly traded companies by order of market capitalization and produces a quarterly list of corporations to be tracked. It is clear that any preemptive indication of how those shares appreciate or depreciate could be a powerful and highly profitable tool for investors.
Evaluating the Hit Ratio
Through the results above, you can see that we at I Know First have developed an algorithm that can consistently predict the S&P 500 throughout various time periods. On average through 2019, I Know First has achieved the incredible feat of hitting the S&P 500’s exact movement 75% of the time for the 14-day prediction time slot. This, in essence, means that the algorithm will be correct 3 out of 4 times on the 14-day time slot allowing our clients to make the safest investments. Additionally, to that, we can also predict the 3-day time slot, 7-day time slot, and one-month time slot at 61%, 63%, and 66% accuracy respectively. This allows our investors to have a safer outlook when investing despite these quick and volatile time periods. To summarize, I Know First provides our investors and clients with tools to predict the S&P 500 with the same probability that most NBA players make free throws.
Conclusion
All in all, we at I Know First have a mission to provide our clients with the best information about the future. By sharpening our abilities to predict the S&P 500 through our incredible Artificial Intelligence system, we provide our clients with increasing certainty that their investment will be safer and more profitable. Within the bounds of certainty, we have consistently been able to find that we can predict the S&P 500 movements above 60% of the time over the last half year. The peak of that is the 75% hit ratio over the 14-day time slot rendering our services can predict the movement correctly 3 out of 4 times on average.
Additionally, we at I Know First are consistently tracking and testing our systems to make sure that we provide the best advisory services. Our strive for perfection has led us to calculate these hit ratios for our products which give our customers increased confidence in our forecasts. We, at I Know First, take pride in these numbers and hope to provide our clients with the service of predicting the S&P with increasing confidence.
