arXiv Machine Learning By Fusheng Luo

From Financial Sentiment Classification to Return Predictability: A QLoRA Benchmark of Large Language Models

Read the original on arXiv Machine Learning →

arXiv:2608. 04200v1 Announce Type: cross Abstract: Financial sentiment classifiers are commonly evaluated against human labels, but strong linguistic performance does not necessarily imply economically useful return predictability.

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arXiv Machine Learning
Sep 18

Evaluating Financial Sentiment in the Age of AI

The paper evaluates twelve financial sentiment models—including dictionary-based methods, finance-specific transformers, and open-source large language models—using linguistic and economic validity criteria. General-purpose LLMs match finance-specific transformers in classification performance but do not yield stronger economic relationships. While several models correlate with earnings surprises, none shows a significant link to next‑day stock returns, and performance is strongest for large earnings beats or misses.

By Arslan Bisharat, Oudom Hean
arXiv Computation and Language
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Same Day, Same Story; One Day Ahead, a Different Signal: The Dual Validity of Financial Sentiment

The study examines whether financial sentiment tools that are validated against human labels also reliably predict market outcomes. Using a large corpus of securities class action messages linked to abnormal stock returns, the authors compare five sentiment instruments—VADER, Loughran‑McDonald, FinBERT, Twitter‑RoBERTa, and an LLM annotator—within a single pipeline. Results show that the alignment between human agreement and sentiment scores varies with sampling strategy and time horizon: conventional sampling favors same‑day associations, while fixed‑n panels yield similar correlations for both same‑day and one‑day‑ahead predictions, yet overall predictive rankings remain weak.

By AS Aravinthkakshan, Laven Srivastava, Harsh Nandwani