Clustering stocks using KMeans

In this exercise, you'll cluster companies using their daily stock price movements (i.e. the dollar difference between the closing and opening prices for each trading day). You are given a NumPy array movements of daily price movements from 2010 to 2015 (obtained from Yahoo! Finance), where each row corresponds to a company, and each column corresponds to a trading day.

Some stocks are more expensive than others. To account for this, include a Normalizer at the beginning of your pipeline. The Normalizer will separately transform each company's stock price to a relative scale before the clustering begins.

Note that Normalizer() is different to StandardScaler(), which you used in the previous exercise. While StandardScaler() standardizes features (such as the features of the fish data from the previous exercise) by removing the mean and scaling to unit variance, Normalizer() rescales each sample - here, each company's stock price - independently of the other.

KMeans and make_pipeline have already been imported for you.

This exercise is part of the course

Unsupervised Learning in Python

Exercise instructions

Import Normalizer from sklearn.preprocessing.
Create an instance of Normalizer called normalizer.
Create an instance of KMeans called kmeans with 10 clusters.
Using make_pipeline(), create a pipeline called pipeline that chains normalizer and kmeans.
Fit the pipeline to the movements array.

Hands-on interactive exercise

Have a go at this exercise by completing this sample code.

# Import Normalizer
____

# Create a normalizer: normalizer
normalizer = ____

# Create a KMeans model with 10 clusters: kmeans
kmeans = ____

# Make a pipeline chaining normalizer and kmeans: pipeline
pipeline = ____

# Fit pipeline to the daily price movements
____

Edit and Run Code

This exercise is part of the course

Unsupervised Learning in Python

IntermediateSkill Level

4.8+

Start Course for Free

Learn how to discover the underlying groups (or "clusters") in a dataset. By the end of this chapter, you'll be clustering companies using their stock market prices, and distinguishing different species by clustering their measurements.

Exercise 1: Unsupervised Learning Exercise 2: How many clusters?Exercise 3: Clustering 2D points Exercise 4: Inspect your clustering Exercise 5: Evaluating a clustering Exercise 6: How many clusters of grain?Exercise 7: Evaluating the grain clustering Exercise 8: Transforming features for better clusterings Exercise 9: Scaling fish data for clustering Exercise 10: Clustering the fish data Exercise 11: Clustering stocks using KMeans

Current Exercise

Exercise 12: Which stocks move together?

In this chapter, you'll learn about two unsupervised learning techniques for data visualization, hierarchical clustering and t-SNE. Hierarchical clustering merges the data samples into ever-coarser clusters, yielding a tree visualization of the resulting cluster hierarchy. t-SNE maps the data samples into 2d space so that the proximity of the samples to one another can be visualized.

Exercise 1: Visualizing hierarchies Exercise 2: How many merges?Exercise 3: Hierarchical clustering of the grain data Exercise 4: Hierarchies of stocks Exercise 5: Cluster labels in hierarchical clustering Exercise 6: Which clusters are closest?Exercise 7: Different linkage, different hierarchical clustering!Exercise 8: Intermediate clusterings Exercise 9: Extracting the cluster labels Exercise 10: t-SNE for 2-dimensional maps Exercise 11: t-SNE visualization of grain dataset Exercise 12: A t-SNE map of the stock market

Dimension reduction summarizes a dataset using its common occuring patterns. In this chapter, you'll learn about the most fundamental of dimension reduction techniques, "Principal Component Analysis" ("PCA"). PCA is often used before supervised learning to improve model performance and generalization. It can also be useful for unsupervised learning. For example, you'll employ a variant of PCA will allow you to cluster Wikipedia articles by their content!

Exercise 1: Visualizing the PCA transformation Exercise 2: Correlated data in nature Exercise 3: Decorrelating the grain measurements with PCA Exercise 4: Principal components Exercise 5: Intrinsic dimension Exercise 6: The first principal component Exercise 7: Variance of the PCA features Exercise 8: Intrinsic dimension of the fish data Exercise 9: Dimension reduction with PCA Exercise 10: Dimension reduction of the fish measurements Exercise 11: A tf-idf word-frequency array Exercise 12: Clustering Wikipedia part I Exercise 13: Clustering Wikipedia part II

In this chapter, you'll learn about a dimension reduction technique called "Non-negative matrix factorization" ("NMF") that expresses samples as combinations of interpretable parts. For example, it expresses documents as combinations of topics, and images in terms of commonly occurring visual patterns. You'll also learn to use NMF to build recommender systems that can find you similar articles to read, or musical artists that match your listening history!

Exercise 1: Non-negative matrix factorization (NMF)Exercise 2: Non-negative data Exercise 3: NMF applied to Wikipedia articles Exercise 4: NMF features of the Wikipedia articles Exercise 5: NMF reconstructs samples Exercise 6: NMF learns interpretable parts Exercise 7: NMF learns topics of documents Exercise 8: Explore the LED digits dataset Exercise 9: NMF learns the parts of images Exercise 10: PCA doesn't learn parts Exercise 11: Building recommender systems using NMF Exercise 12: Which articles are similar to 'Cristiano Ronaldo'?Exercise 13: Recommend musical artists part I Exercise 14: Recommend musical artists part II Exercise 15: Final thoughts