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Evolutionary Computation in Finance

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Encyclopedia of Machine Learning and Data Mining

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Definition

Evolutionary computation (EC) in finance is an area of research and knowledge which involves the use of EC techniques in order to approach topics in finance. This area of knowledge is similar to EC in economics; in fact, the areas frequently overlap in some of the topics they approach. The application of EC in finance pursues two main purposes: first, to overcome the limitations of some theoretical models, also departing from some of the assumptions made in those models, and, second, to innovate in this extremely competitive area of research, given the powerful economic incentives to do so.

EC techniques have been widely used in a variety of topics in finance. Among the most relevant we find: financial forecasting, algorithmic and automatic trading, option pricing, portfolio optimization, artificial financial markets, credit rating, credit scoring, bankruptcy prediction, and filtering techniques.

Motivation and Background

Evolutionary computation (EC) is a field in machine...

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Author information

Authors and Affiliations

  1. Directorate of Financial System Risk Analysis, Banco de México, Av. 5 de Mayo No. 1, 06059, Mexico City, Mexico

    Serafín Martínez-Jaramillo

  2. German Center for Neurodegenerative Diseases, Banco de México, Mexico City, Mexico

    Tonatiuh Peña Centeno

  3. Banco de México, Av. 5 de Mayo No. 6, 06059, Mexico City, Mexico

    Biliana Alexandrova-Kabadjova

  4. Directorate of Regulation and Supervision, Banco de México, 06059, Mexico City, Mexico

    AlmaLilia García-Almanza

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

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Editors and Affiliations

  1. The University of New South Wales, Sydney, NSW, Australia

    Claude Sammut

  2. Faculty of Information Technology, Monash University, Melbourne, VIC, Australia

    Geoffrey I. Webb

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Martínez-Jaramillo, S., Centeno, T.P., Alexandrova-Kabadjova, B., García-Almanza, A. (2017). Evolutionary Computation in Finance. In: Sammut, C., Webb, G.I. (eds) Encyclopedia of Machine Learning and Data Mining. Springer, Boston, MA. https://doi.org/10.1007/978-1-4899-7687-1_88

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