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Evolutionary Computation in Finance

  • Reference work entry
Encyclopedia of Machine Learning

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Definition

Evolutionary computation (EC) in finance is an area of research and knowledge which involves the use of techniques, known as evolutionary algorithms (EAs), to approach topics in finance. This area of knowledge is similar to EC in economics, in fact such areas frequently overlap regarding some of the topics approached. The application of EC in finance pursues two main goals: first, to overcome the limitations of some theoretical models (and the strong assumptions being made by such models) and second, to innovate in this extremely competitive area of research.

Motivation and Background

Evolutionary computation is a field in Machine Learning in which the developed techniques apply the principle of Evolution in several different ways. The application of EC in finance includes portfolio optimization, financial forecasting, asset pricing, just to mention some examples.

In finance, competition is at the center of the everyday activities by the individuals and companies that...

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Author information

Authors and Affiliations

    Authors
    1. Serafín Martínez-Jaramillo
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    2. AlmaLilia García-Almanza
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    3. Biliana Alexandrova-Kabadjova
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    4. Tonatiuh Peña Centeno
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    Editor information

    Editors and Affiliations

    1. School of Computer Science and Engineering, University of New South Wales, Sydney, Australia, 2052

      Claude Sammut

    2. Faculty of Information Technology, Clayton School of Information Technology, Monash University, P.O. Box 63, Victoria, Australia, 3800

      Geoffrey I. Webb

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    Martínez-Jaramillo, S., García-Almanza, A., Alexandrova-Kabadjova, B., Centeno, T.P. (2011). Evolutionary Computation in Finance. In: Sammut, C., Webb, G.I. (eds) Encyclopedia of Machine Learning. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-30164-8_274

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