Integrating Machine Learning and Traditional Models for Financial Risk Quantification

This study explores the integration of machine learning techniques with traditional financial risk measurement models to enhance the accuracy and robustness of risk quantification. By employing models such as Value at Risk (VaR) and GARCH alongside machine learning algorithms like Random Forest and Neural Networks, the research demonstrates improved prediction accuracy across various market conditions. The findings highlight the advantages of an integrated approach, which not only provides a comprehensive framework for financial risk assessment but also bridges the gap between theoretical models and practical applications. This work contributes to the evolving landscape of financial risk management by offering insights into effective model integration, thereby paving the way for future research in advanced risk quantification strategies.

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Publication Details

Journal
Financial economics insights.
Published
2024-11-05
DOI
https://doi.org/10.70088/6bb8rk74
Primary Topic
Stock Market Forecasting Methods
Type
article
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article

Integrating Machine Learning and Traditional Models for Financial Risk Quantification

Xu Zhang
Financial economics insights.
Stock Market Forecasting Methods
article

Integrating Machine Learning and Traditional Models for Financial Risk Quantification

Xu Zhang
article en

Abstract

This study explores the integration of machine learning techniques with traditional financial risk measurement models to enhance the accuracy and robustness of risk quantification. By employing models such as Value at Risk (VaR) and GARCH alongside machine learning algorithms like Random Forest and Neural Networks, the research demonstrates improved prediction accuracy across various market conditions. The findings highlight the advantages of an integrated approach, which not only provides a comprehensive framework for financial risk assessment but also bridges the gap between theoretical models and practical applications. This work contributes to the evolving landscape of financial risk management by offering insights into effective model integration, thereby paving the way for future research in advanced risk quantification strategies.

Financial economics insights.Vol. 1(1)
Universiti Sains Malaysia (MY)
Life in Land
Openalex Percentile: Top 74%
Stock Market Forecasting Methods
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