Comparative Analysis of S&P 500 and NASDAQ Indices: A Machine Learning Approach to Understanding Differential Market Sensitivities and Growth Stock Dynamics

Abstract

This paper delves into the implementation of a Walking Forward Machine Learning Model designed for the construction and forecasting of portfolios comprised of randomly selected stocks from the S&P 500 and NASDAQ indices. The primary objective of the study is to scrutinize the attributes of technology stocks, specifically assessing whether they exhibit characteristics typical of growth stocks. Furthermore, the research aims to discern potential disparities in predictive characteristics between technology stocks and standard equities. The passage elucidates the research methodology, encompassing data collection, model establishment, and evaluation processes, along with insights into the intricacies of portfolio construction. The empirical findings shed light on the model's efficacy in predicting stock returns and its aptitude in crafting investment portfolios. The concluding remarks underscore the significance of adjusting the model's learning rate in accordance with the distinct traits of various markets, emphasizing the need for a nuanced approach to enhance its overall generalization performance. This study contributes valuable insights into optimizing machine learning models for effective portfolio management in dynamic financial markets.