Machine Learning

Free CFA Level II lesson in Quantitative Methods. 13 min read, ~1,880 words.

Bias-variance tradeoff: complex models overfit (high variance), simple models underfit (high bias). Diagnose from the training/test gap. LASSO (L1) sets coefficients to exactly zero for automatic feature selection. Ridge (L2) shrinks but never zeroes them. Bagging and random forests reduce variance. Boosting reduces bias through sequential error correction. Do not...