Today’s post is about a phenomena observed in many “naturally” occurring data collections that can be exploited in accounting fraud detection. This phenomena is referred to as Benford’s Law and is named after Frank Benford who popularised it. The original discovery is actually credited to Simon Newcomb. The main idea is that leading digits in … More Fraud Detection with Benford’s Law
In today’s post I wanted to describe classification trees. I will concentrate on Classification and Regression Tree (CART) algorithm. As I discuss the main features of this algorithm I will contrast it with other widely used methods to construct classification trees. What A Classification Tree Looks Like: Before diving into the algorithm let’s have a … More Classification Trees
In my previous post I showed a coordinate descent algorithm for solving Lasso coefficients. Lasso model is part of a family of penalized regression models that are popular in machine learning and predictive modeling. In today’s post I want to show you how this model can be used to estimate the monthly average price of … More Lasso model example (LME’s Aluminium Futures Price)
Previously I discussed the benefit of using Ridge regression and showed how to implement it in Excel. In this post I want to present the LASSO model which stands for Least Absolute Shrinkage and Selection Operator. We are again trying to penalize the size of the coefficients just as we did with ridge regression but … More LASSO Regression in VBA
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