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Charting The Future of Forecasting: The Sentiment Indicator Advantage
Running an XGBoost Regression on Sentiment Data
In the dynamic landscape of financial markets, understanding market sentiment is paramount for making informed investment decisions. This article delves into the realm of sentiment analysis and its application in forecasting the daily returns of financial assets. By harnessing the power of sentiment data, we aim to uncover hidden patterns and insights that can provide traders and investors with a valuable edge in navigating the foreign exchange market’s fluctuations.
What is Sentiment Analysis?
Market sentiment analysis is a specialized application of sentiment analysis that focuses on evaluating and interpreting sentiment, opinions, and emotions expressed in financial data, news, and social media to gain insights into financial markets and make informed investment decisions. This analysis aims to gauge the collective sentiment of investors and traders and its potential impact on asset prices and market movements.
Using historical sentiment data as inputs in a regression task with the aim to forecast the return of the underlying asset is an interesting experiment. For this task we will use XGBoost regression on sentiment data (inputs) to forecast the…