Algorithm predicts market transitions months in advance, revolutionizing financial forecasting.
The article develops a method to predict when the stock market will become more unpredictable in the future. By analyzing patterns in past data, the researchers created models to forecast changes in volatility up to three months ahead. They found that by breaking down volatility into specific and structural components, they could better predict when the market would shift to a more unstable state. This research could help investors anticipate when the market will become more unpredictable and make better decisions accordingly.