The Evolution of the Classifier

Any model that forecasts stocks as going one direction or another can be thought of as a classifier. It's very difficult to predict, you know absolute amount of future returns and so sometimes what people will do is they'll simplify the problem into saying rather than predicting absolute amount Let's just predict it's going to go up or down. There are two trends that have really caused this concept of a Factor as a classifiers to emerge. The first is that historically when I say historically i'm talking maybe you know five ten years ago You could build a quant strategy around a single alpha factor or maybe two or three alpha factors Um, but the world is quite competitive and this is a quite lucrative endeavor