Mastering Python for Finance - Second Edition

Classification and regression in supervised machine learning

There are two major types of supervised machine algorithms, mainly classification and regression. Classification machine learning models attempt to predict and classify responses from a list of predefined possibilities. These predefined possibilities may be binary classification (such as a Yes or No response to a question: Is this email spam?) or multi-class classification.

Regression machine learning models attempt to predict continuous output values. For example, predicting housing prices or the temperature expects a continuous range of output values. Common forms of regressions are ordinary least squares (OLS) regression, LASSO regression, ridge regression, and elastic net regularization. ...