Why is it Called a Meme Stock?
Moreover, meme stock refers to the shares of a company that have gained a cult-like following online. In addition, through social media platforms.
Rebellion Research managed to conduct research on the predictivity of the Meme Stock index in predicting S&P500 movements. After trying various methods and approaches, we have deemed Gradient Boosting to be the most effective machine learning model in predicting S&P movements with the Meme Stock Index. The most effective parameters were using 30-day linear regression and 1-day rolling beta.
In addition, we also experimented with different rolling windows when it comes to identifying the buy/sell signals themselves and managed to come to the conclusion that 6-day time periods were most effective. In other words, the Meme Stock Index is most effective in predicting the S&P movements that:
will take place in 6 days time!
Daily beta fluctuations in the Meme Stock index are effective in predicting S&P movements that take place 6 days later.
As can be seen from our research, it appears that the Meme Stock, or MS index can be used to predict movements in the S&P500.
Firstly, there appears to be a reasonably accurate trend between our predicted prices and the actual prices for the S&P500. Secondly, when it comes to predicting buy/sell signals, the MS index is able to predict the correct signal at an accuracy rate of 67.21% which is pretty good!
Moreover, by using a confusion matrix, we see that the MS index manages to correctly predict a sell signal 100% of the time.
The confusion matrix demonstrates this. By showing that there are 16 instances where our model predicted a sell signal. And there was a sell signal and 0 instances where our model predicted a sell signal. And there wasn’t a sell signal. Thus, initial research shows the MS index is excellent at predicting sell-offs/sell signals in the S&P500. More specifically, the MS index is very effective in predicting sell-offs/sell signals that will take place in 6-days.