On Sunday, March 15, the industry conclave at the Exchange conference kicked off with the session “Investment Strategies Powered by Adaptive AI.” The session featured QuantumStreet AI’s CIO, Chris Natividad.
AI is creating massive shifts in the investment landscape, but it is also revolutionizing how investors invest. Natividad’s talk explored how financial professionals can use adaptive AI.
The Data Overload Challenge
“The data is absolutely exploding,” Natividad said. “90% of all of the data that’s ever been created has been created in the last two years.” The data overload challenge can be an obstacle for investors seeking to pay attention to the most important information. Separating signal from noise is harder than ever as data continues to explode, but AI can do something about it.
The key to capturing alpha, according to Natividad, is “combining structured data points with unstructured data points.” Five years ago people weren’t using LLMs and AI. Over time, these tools have grown more sophisticated and Natividad sees that as continuing. “Making sure that you are utilizing a system that is able to capture this unstructured data that’s growing is tremendously important."
Faster Risk Detection Through AI
AI can be a powerful way for investors to sift through the data and understand, on a granular level, the challenges that are coming. With events in the Middle East affecting markets, a host of risks could arise at any moment. With a growing data set, the possibility exists to understand, on an extremely deep level, when a given investment could become riskier.
Natividad walked through some of the products that are using AI to parse through data and make better investment decisions. Specifically products that help to determine which exposures are more or less risky at any given moment. “These systematic strategies are combing that unstructured data with structured data,” he explained.
He also noted that investors should pay attention to thematic expansion as firms build out different ways to approach given themes leveraging the granular data interpretation power of AI. “The data will continue to grow, the technology is going to continue to improve, and the winners will be those who continue to incorporate AI into their workflows.”
Dealing With Hallucinations
Natividad said it is critical to train AI well and make sure that it is used with trained financial professionals to ensure accuracy. He also said that he expects hallucinations to diminish as the tool improves and with more headway made into quantum computing.
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