Economic Data Sciences PRO
Understandable A.I.
Understandable Artificial Intelligence
Our Story
Founders & Our Story
©2019 Economic Data Sciences
Edmund Walsh
Boris Vilidnitsky, CFA
Founder, Lead Data Scientist
Founder, COO
- 11 years of research experience
- Focus on applied mathematics, risk management, asset allocation, macro-economics, and computer science
- MA in International Economics and Finance from Brandeis University; BA in Political Science from The Ohio State University
- 10 years of experience in asset management
- Focus on capital markets with specialties in equities, emerging markets, and Europe
- MBA from Columbia and London Business Schools; MSc in Finance from Brandeis University; BA in Mathematics and Computer Science from Boston College
Boris and Edmund met 10 years ago while studying at Brandeis.
6 years ago, Edmund saw the potential in simultaneous problem solving and began developing the complex infrastructure and A.I. driven software for it.
In early 2017, Boris developed the business plan and in July EDS was incorporated
Takeaways From Other Clients
©2019 Economic Data Sciences
From our work with other partners, following challenges emerge:
- Get more from less
- Can we make existing resources more efficient?
- Beyond attribution
- What drives a manager's investment and style?
- Fee drag
- Can we get the same results with lower fees?
Takeaways From Other Clients
©2019 Economic Data Sciences
Endowments are looking for personalized, real-world solutions
- Beyond portfolio theory
- Is there a portfolio construction tool for the real world?
- 'Fat'-Tail Risk
- How can we manage down markets that hurt performance and can permanently impair capital?
- Balancing risk and opportunities in their many forms
- How can we determine the 'right' trade-off for our investments?
The Case for Artificial Intelligence
©2019 Economic Data Sciences
Significant performance improvement when combined with humans
At its core, A.I. allows for a broader, deeper analysis
Provides significant improvement in efficiency
It has a unique ability to make improvements by searching across every known factor to get the best from existing best-practices
56% of institutional investors plan to increase integration of A.I.*
* - Greenwich Associates 2018 survey
A.I. is best used when combined with humans
A.I. Already Impacts Your Investments
©2019 Economic Data Sciences
- Market participants are quickly adapting
- 2013 these groups were negatively correlated, in 2018 strongly positive
The observable impact of A.I. in hedge funds is clear*
*Past performance is not a reliable indicator of future results, Yearly performance available in the Appendix
Hiring A.I. Manager is Not Sufficient
©2019 Economic Data Sciences
- Best practice in risk management limits investment into any single manager
- As a result, any investment in a Manager using A.I. will have a relatively small impact at the total portfolio level
- The market learns quickly and is incorporating A.I.
- Decreases the potential each individual manager can bring
- Multiple A.I. managers won't coordinate efforts
- This significantly detracts from A.I.'s potential
- Real A.I. value add: supplement entire investment process
Best benefits are generated from integration with investment process
A.I. Is Transformational
©2019 Economic Data Sciences
Using A.I. in financial services has become industry best-practice
- Aug 2017: 20% usage of A.I. or Machine Learning
- Aug 2018: 56% usage
Blackrock Data Science Core
Exploratory programs on machine learning
- A.I. based risk management
- Dynamic factor analysis using A.I.
- A.I. reconciling investment decisions
EDS A.I. Approach
Combining several A.I. implementations to make for more understandable solutions
Machine Learning
Human + Machine Insight
Best Trade-offs In A Complex World
Broader, Deeper, More Detailed
Extending research from Stanford our modelling process flexibly incorporates data and checks for robustness
Combining the power of distributed computing, our A.I. solves problems simultaneously by combining optimization with an approach inspired by genetic algorithms
Our custom built data infrastructure combines many of the latest open source foundations which we have extended to meet today's needs
©2019 Economic Data Sciences
Artificial Intelligence
Big And Fast Data
EDS A.I. Implementation
Software which incorporates more data and simultaneous decision making
Where Does EDS Tech Stack Up?
©2019 Economic Data Sciences
Cutting edge technology with focus on ease of interpretation
How We Work
©2019 Economic Data Sciences
EDS provides 3 possible partner collaborations:
-
Consulting Services
- Usually the preferred partner starting point
- Providing full analysis and reporting
- Popular areas: portfolio construction, manager selection, scenario analysis
-
User Interface, Online Web Solution
- Personalized functionalities based on individual requirements
- EDS continues to advise as needed
-
Data Infrastructure
- EDS helps organize partner data, adding additional sources
EDS Offers a Unique Proposition
©2019 Economic Data Sciences
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Expanding your current tools
- Current tools consider only 2-3 dimensions
- A.I. has unlimited potential to consider multiple dimensions
- EDS incorporates all other models
-
Simultaneous evaluation of all metrics - A.I. and Machine Learning
- Holistic perspective
-
Adapts to new information
- A.I. adjusts the models based on new data
-
Customized preferences
- Each optimization is adjusted based on client's preferences
Tangible Benefits to Working With EDS
©2019 Economic Data Sciences
EDS analysis has made immediate improvements in 100% of cases
*Past performance is not a reliable indicator of future results, yearly performance breakout in the appendix
Added benefit* across a wide range of situations and client types
*Data from EDS & Bloomberg, courtesy of London Business School
Examples
©2019 Economic Data Sciences
-
Finance
-
Big Data simulations
- Across any data-driven industry
- For risk management or forward projections
Click to learn more
The EDS Proposition
©2018 Economic Data Sciences
A.I. based software tool which incorporates more data and simultaneous decision making
More informed decisions and
increased efficiency
The EDS Proposition
©2018 Economic Data Sciences
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Organizes and connects your data - combining all available sources
- Leads to more visibility and communication across teams
-
Significantly increases the amount of data you can analyze
- More data means more informed decisions
- A.I. can focus resources and increase the efficiency of your team
- A.I. driven optimization finds
personalized
solutions
- EDS software considers all parameters, AT THE SAME TIME
- This allows our solution to be the most complete
- Big-data simulations examine the complexities decision makers are facing
Main software capabilities
EDS vs. Existing Products
©2018 Economic Data Sciences
-
Expanding Your Current Tools
- Current tools consider only 2-3 dimensions
- A.I. has unlimited potential to consider multiple dimensions
- EDS incorporates all other models
-
Simultaneous evaluation of all metrics - A.I. and Machine Learning
- Holistic perspective
-
Adapts to new information
- A.I. adjusts the models based on new data
-
Customized preferences
- Each optimization is adjusted based on client's preferences
How Does It Work?
©2018 Economic Data Sciences
-
EDS organizes your data, adding additional desired sources
- Combining all existing and desired sources into one
- This allows for a broader and deeper persepctive
-
Based on your goals, EDS software finds optimal solution
- Goals can be quantitative or qualitative
- All goals are being considered simultaneously
-
Each solution includes trade-off costs between all metrics/goals
- Allowing the user to understand the 'cost' of each decision
- Users can modify their preferences between the goals
Each user has a personalized online user interface
Machine Learning
Human + Machine Insight
Best Trade-offs In A Complex World
Broader, Deeper, More Detailed
Extending research from Stanford our modelling process flexibly incorporates data and checks for robustness
Combining the power of distributed computing, our A.I. solves problems simultaneously by combining optimization with an approach inspired by genetic algorithms
Our custom built data infrastructure combines many of the latest open source foundations which we have extended to meet today's needs
©2018 Economic Data Sciences
Artificial Intelligence
Big And Fast Data
What Powers The EDS Tools?
Our research extends and combines several areas. These solutions take advantage of methods that were not possible even 5 years ago
Where Does EDS Tech Stack Up?
©2018 Economic Data Sciences
Examples
©2018 Economic Data Sciences
-
Finance
-
Big Data simulations
- Across any data-driven industry
- For risk management or forward projections
-
Logistics
- Finding optimized solution taking into account salaries, distances, time, etc.
-
Medical
-
Energy management
Click to learn more
Infrastructure Review
Building On Principals, A New Frontier
The EDS Infrastructure - Big Picture
©2018 Economic Data Sciences
Cloud Resources
We seamlessly combine physical and cloud resources which can be dynamically managed
EDS Data Center
Combined Computing Power
Client Interface
Our Technology Stack
©2018 Economic Data Sciences
Scala
Zookeeper
The EDS Infrastructure - Components
©2018 Economic Data Sciences
Each component of the technology stack leads towards our infrastructure principals and a more effective solution
| Cassandra | Database | Meets All | Puts Data of Any Kind Closer To Analysis For Speed and Flexibility |
| Hadoop | Distributed Disk | Meets All | Quickly Consumers Any Type of Data |
| Mesos | Scheduler | Meets All | Coordinates Tools for 'Drop-in' Flexibility |
| Zookeeper | Failover Coordinator | Meets All | Coordinates Redistribution of 'Duties' During Failures Or When Connections Are Dropped |
| Spark, Scala, and R | Analytics | Combined -- Meets All | When Combined, Tools Provide Analytics In Ways That Align With Principals |
| Play | Front-End | Meets All | Visualizes to client and collects client information |
| Component | Purpose | Principal | What It Does |
|---|
The EDS Infrastructure - Security
©2018 Economic Data Sciences
- Point to point encryption over the network
- Data is never exposed without encryption
- Client to server encryption
- In line with best practices at other banks. Each client session is encrypted regardless of where the client is connecting from
- Cloud compute not cloud storage
- We use the cloud for compute power not storage, we control the physical location of each data point
- Multi-tiered security layers
- Designed with multiple layers of security so each must be compromised separately
Always at the top of our list
EDS Infrastructure - Summary
©2018 Economic Data Sciences
- Scale and speed
- Add nearly an unlimited number of 'factors' - qualitative/quantitative
- Can run in seconds/minutes and so could be done 'live' for clients
- Each analysis is applied for all
- Data communication - goodbye to silos
- Each part of the business process can share information
- More in depth client feedback
- Better understanding of client interest
These features make possible real advances 'on the ground'
Get In Touch
©2018 Economic Data Sciences
info@EconomicDataSciences.com
info@EconomicDataSciences.com
The EDS offering
By Economic Data Sciences
