Sunday, February 28, 2021
  • Setup menu at Appearance » Menus and assign menu to Top Bar Navigation
Advertisement
  • AI Development
    • Artificial Intelligence
    • Machine Learning
    • Neural Networks
    • Learn to Code
  • Data
    • Blockchain
    • Big Data
    • Data Science
  • IT Security
    • Internet Privacy
    • Internet Security
  • Marketing
    • Digital Marketing
    • Marketing Technology
  • Technology Companies
  • Crypto News
No Result
View All Result
NikolaNews
  • AI Development
    • Artificial Intelligence
    • Machine Learning
    • Neural Networks
    • Learn to Code
  • Data
    • Blockchain
    • Big Data
    • Data Science
  • IT Security
    • Internet Privacy
    • Internet Security
  • Marketing
    • Digital Marketing
    • Marketing Technology
  • Technology Companies
  • Crypto News
No Result
View All Result
NikolaNews
No Result
View All Result
Home Machine Learning

If S&P500 Drops 5% One Week, What’s The Chance It’ll Rise Next Week/Month?

August 20, 2019
in Machine Learning
If S&P500 Drops 5% One Week, What’s The Chance It’ll Rise Next Week/Month?
586
SHARES
3.3k
VIEWS
Share on FacebookShare on Twitter

A television screen displays news about the U.S. Federal Reserve’s announcement while traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S.. Photographer: Michael Nagle/Bloomberg

© 2016 Bloomberg Finance LP

You might also like

Machine Learning May Reduce Mental Health Misdiagnosis

AI & ML Are Not Same. Here's Why – Analytics India Magazine

Is Wattpad and its machine learning tool the future of TV? — Quartz

We started with a simple question that everyone is asking about the markets and S&P 500: given a certain drop or rise, say a 5% drop in a week, what should we expect for the next week? Is it very likely that the S&P 500 will recover the next week? What about the next month or a quarter?

In fact, we found that if the S&P 500 drops 5% in a week (5 trading days), there is only a ~12% chance that it will rise by 10% over the subsequent month (20 trading days). Want to try other combinations? You can test a variety of scenarios on the Trefis Machine Learning Engine to calculate if S&P 500 dropped, what’s the chance it’ll rise.

For example, after a 5% drop over a week (5 trading days), the Trefis machine learning engine says chances of an additional 5% drop over say the next month, are about 15%. Quite significant, and helpful to know for someone trying to recover from a loss. Knowing what to expect for almost any scenario is powerful. It can help you avoid rash moves. Given the recent volatility in the market, the mix of macroeconomic events, including the trade war with China, and the US Federal Reserve’s moves, we think investors can prepare better.

For clarity, in an earlier analysis in this series, we assessed what are the chances of S&P 500’s drop or rise in the first place. Here we focus on evaluating, given a certain drop or rise, what move can investors expect over the coming day, a week, or months.

Below, we also discuss a few scenarios and answer common investor questions.

Question 1: Does a rise in S&P 500 become more likely after a drop?
Answer:

Consider two situations,
Case 1: S&P 500 drops by 5% in a week
Case 2: S&P 500 rises by 5% in a week

Is the chance of say a 5% rise in S&P 500 over the subsequent month after Case 1 or Case 2 occurs much higher for one versus the other?
The answer is absolutely!

Turns out, chances of a 5% rise over the next month (20 trading days) is meaningfully more for Case 1, where the S&P has just suffered a big loss, versus Case 2.

Specifically, chances of a 5% rise in S&P 500 over the next month:
= 34% after Case 1, where S&P 500 drops by 5% in a week
versus,
= 26% after Case 2: where S&P 500 rises by 5% in a week

 

Question 2: What about the other way around, does a drop in S&P 500 become more likely after a rise?
Answer:

Consider, once again, two cases
Case 1: S&P 500 drops by 5% in a week
Case 2: S&P 500 rises by 5% in a week

Turns out the chances of a 5% drop over the next month after Case 1 or Case 2 has occurred, is actually quite similar, both pretty close to 15%.

 

Question 3: Does patience pay?
Answer:

According to data and Trefis machine learning engine’s calculations, absolutely!

Given a drop of 5% in S&P 500 over a week (5 trading days), while there is only about 18% chance the S&P 500 will gain 5% over the subsequent week, there is more than 50% chance this will happen in 6 months, and 74% chance it’ll gain 5% over a year (about 250 trading days).

The table below shows the trend:

Worthy to note row 1 in the table above.
Question 4: What about the possibility of a drop after a rise if you wait for a while?
Answer:

Two interesting things we see.

First, after seeing a rise of 5% over 5 days, the chances of a 5% drop in S&P 500 are about 15% over the subsequent month of waiting (20 trading days). However, this chance drops slightly to about 13% when the waiting period is a quarter (60 trading days). Why is that?

We think it’s the result of two opposing forces:

This latter force is also evident when you compare the first two rows of the table below.

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams| Product, R&D, and Marketing Teams

More Trefis Data

Like our charts? Explore example interactive dashboards and create your own

Credit: Google News

Previous Post

AI in Gjakova — Object Detection like You Never Seen It Before

Next Post

Beefy Leaked Specs Hint at PlayStation 5’s Price Tag

Related Posts

New AI Machine Learning Reduces Mental Health Misdiagnosis
Machine Learning

Machine Learning May Reduce Mental Health Misdiagnosis

February 28, 2021
AI & ML Are Not Same. Here's Why – Analytics India Magazine
Machine Learning

AI & ML Are Not Same. Here's Why – Analytics India Magazine

February 27, 2021
Is Wattpad and its machine learning tool the future of TV? — Quartz
Machine Learning

Is Wattpad and its machine learning tool the future of TV? — Quartz

February 27, 2021
New AI Machine Learning Reduces Mental Health Misdiagnosis
Machine Learning

New AI Machine Learning Reduces Mental Health Misdiagnosis

February 27, 2021
MindMed Closes Acquisition of HealthMode, a Leading Machine Learning Digital Medicine Company
Machine Learning

MindMed Closes Acquisition of HealthMode, a Leading Machine Learning Digital Medicine Company

February 27, 2021
Next Post
Beefy Leaked Specs Hint at PlayStation 5’s Price Tag

Beefy Leaked Specs Hint at PlayStation 5’s Price Tag

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recommended

Plasticity in Deep Learning: Dynamic Adaptations for AI Self-Driving Cars

Plasticity in Deep Learning: Dynamic Adaptations for AI Self-Driving Cars

January 6, 2019
Microsoft, Google Use Artificial Intelligence to Fight Hackers

Microsoft, Google Use Artificial Intelligence to Fight Hackers

January 6, 2019

Categories

  • Artificial Intelligence
  • Big Data
  • Blockchain
  • Crypto News
  • Data Science
  • Digital Marketing
  • Internet Privacy
  • Internet Security
  • Learn to Code
  • Machine Learning
  • Marketing Technology
  • Neural Networks
  • Technology Companies

Don't miss it

New AI Machine Learning Reduces Mental Health Misdiagnosis
Machine Learning

Machine Learning May Reduce Mental Health Misdiagnosis

February 28, 2021
Why would you ever trust Amazon’s Alexa after this?
Internet Security

Why would you ever trust Amazon’s Alexa after this?

February 28, 2021
AI & ML Are Not Same. Here's Why – Analytics India Magazine
Machine Learning

AI & ML Are Not Same. Here's Why – Analytics India Magazine

February 27, 2021
Microsoft: We’ve open-sourced this tool we used to hunt for code by SolarWinds hackers
Internet Security

Microsoft: We’ve open-sourced this tool we used to hunt for code by SolarWinds hackers

February 27, 2021
Is Wattpad and its machine learning tool the future of TV? — Quartz
Machine Learning

Is Wattpad and its machine learning tool the future of TV? — Quartz

February 27, 2021
Oxford University lab with COVID-19 research links targeted by hackers
Internet Security

Oxford University lab with COVID-19 research links targeted by hackers

February 27, 2021
NikolaNews

NikolaNews.com is an online News Portal which aims to share news about blockchain, AI, Big Data, and Data Privacy and more!

What’s New Here?

  • Machine Learning May Reduce Mental Health Misdiagnosis February 28, 2021
  • Why would you ever trust Amazon’s Alexa after this? February 28, 2021
  • AI & ML Are Not Same. Here's Why – Analytics India Magazine February 27, 2021
  • Microsoft: We’ve open-sourced this tool we used to hunt for code by SolarWinds hackers February 27, 2021

Subscribe to get more!

© 2019 NikolaNews.com - Global Tech Updates

No Result
View All Result
  • AI Development
    • Artificial Intelligence
    • Machine Learning
    • Neural Networks
    • Learn to Code
  • Data
    • Blockchain
    • Big Data
    • Data Science
  • IT Security
    • Internet Privacy
    • Internet Security
  • Marketing
    • Digital Marketing
    • Marketing Technology
  • Technology Companies
  • Crypto News

© 2019 NikolaNews.com - Global Tech Updates