NLP & LLMs in Finance

Machine learning techniques applied to the problem of financial market forecasting struggle with dynamic regime switching, or underlying correlation and covariance shifts in true (hidden) market variables. Drawing inspiration from the success of reinforcement learning in robotics, particularly in ag

Forecast evaluation in finance has relied on aggregate accuracy metrics and predictive-accuracy tests built on point-forecast errors. These instruments evaluate forecast outputs but cannot evaluate the process of forecast generation, which is increasingly relevant as forecasting systems become agent

In this paper, I present the first comprehensive, around-the-clock analysis of systematic jump risk by combining high-frequency market data with contemporaneous news narratives identified as the underlying causes of market jumps. These narratives are retrieved and classified using a state-of-the-art

This study investigates whether cryptocurrency whitepaper narratives align with empirically observed market factor structure. We construct a pipeline combining zero-shot NLP classification of 38 whitepapers across 10 semantic categories with CP tensor decomposition of hourly market data (49 assets,

This paper analyses the risk factors around investing in global supply chain infrastructure: the energy market, investor sentiment, and global shipping costs. It presents portfolio strategies associated with dynamic risks. A time-varying parameter vector autoregression (TVP-VAR) model is used to stu

Forecasting stock market prices remains a complex challenge for traders, analysts, and engineers due to the multitude of factors that influence price movements. Recent advancements in artificial intelligence (AI) and natural language processing (NLP) have significantly enhanced stock price predictio

The accurate prediction of stock movements is crucial for investment strategies. Stock prices are subject to the influence of various forms of information, including financial indicators, sentiment analysis, news documents, and relational structures. Predominant analytical approaches, however, tend

We propose MoE-F - a formalized mechanism for combining $N$ pre-trained Large Language Models (LLMs) for online time-series prediction by adaptively forecasting the best weighting of LLM predictions at every time step. Our mechanism leverages the conditional information in each expert’s running perf

Signal decay and regime shifts pose recurring challenges for data-driven investment strategies in non-stationary markets. Conventional time-series and machine learning approaches, which rely primarily on historical correlations, often struggle to generalize when the economic environment changes. Whi

Financial time series forecasting is central to trading, portfolio optimization, and risk management, yet it remains challenging due to noisy, non-stationary, and heterogeneous data. Recent advances in time series foundation models (TSFMs), inspired by large language models, offer a new paradigm for

Corporate financial disclosures often unfold over time, with announcements, prepared remarks, and discussion spanning multiple high-frequency return intervals. Financial NLP benchmarks can therefore suffer from a within-event timing mismatch when the prediction target begins before the textual or au

As option markets grow and AI advances, agentic systems for option trading are gaining increasing attention. Language-model-based agents can reason over contextual information such as news, but option trading presents a particularly challenging decision problem: a single stock can have thousands of

Problem. “Thinking” LLMs (TLLMs) expose explicit or hidden reasoning traces and are widely believed to generalize better on complex tasks than direct LLMs. Whether this promise carries to noisy, heavy-tailed and regime-switching financial data remains unclear. Approach. Using Indian equities (NIFTY

This paper investigates whether artificial intelligence can enhance stock clustering compared to traditional methods. We consider this in the context of the semi-strong Efficient Markets Hypothesis (EMH), which posits that prices fully reflect all public information and, accordingly, that clusters b

We investigate the efficacy of large language models (LLMs) in sentiment analysis of U.S. financial news and their potential in predicting stock market returns. We analyze a dataset comprising 965,375 news articles that span from January 1, 2010, to June 30, 2023; we focus on the performance of vari

Identifying companies with similar profiles is a core task in finance with a wide range of applications in portfolio construction, asset pricing and risk attribution. When a rigorous definition of similarity is lacking, financial analysts usually resort to ’traditional’ industry classifications such

Recently, LLMs (Large Language Models) have been adapted for time series prediction with significant success in pattern recognition. However, the common belief is that these models are not suitable for predicting financial market returns, which are known to be almost random. We aim to challenge this

I examine the value of information from sell-side analysts by analyzing a large corpus of their written reports. Using embeddings from state-of-the-art large language models, I show that qualitative information in analyst reports explains above 10% of contemporaneous stock returns out-of-sample, a v

Financial LLM agents are often evaluated by comparing their end-to-end returns with those of a baseline and testing the paired difference against zero. This measures whether deploying the agent changes realized performance, but it does not isolate event-selection skill. An agent that frequently chan

Large language models can extract richer signals from financial news than fixed sentiment lexicons, and recent work has explored feeding such signals into portfolio construction. We study an uncertainty-aware construction that feeds model-predicted risk – decomposed into aleatoric and epistemic com