Python for Finance
Why Python?
The answer is simple: it is powerful yet very accessible. Python has become the most popular
programming language for data science because it allows us to forget about the tedious parts
of programming and offers us an environment where we can quickly jot down our ideas and
put concepts directly into action.
1. Installing Python 3.9.8 (or higher) and packages from the Python Package Index
Python is available for all three major operating systems - Microsoft Windows, mac OS, and
Linux - and the installer, as well as the documentation, can be downloaded from the official
Python website: https://www.python.org/downloads/. It is recommended you use the most
recent version of Python 3 that is currently available.
The additional packages can be installed via the pip installer program, which has been part of
the Python standard library since Python 3.3. More information about pip can be found at
https://docs.python.org/3/installing/index.html.
After we have successfully installed Python, we can execute pip from the open command
prompt [windows + X /run] to install additional Python packages:
C:\Users\user\AppData\...\...\...\Python\Python39\python -m pip install package_name
package_name = matplotlib, yfinance, pandas, pandas-datareader, numpy, beautifulsoup4,
scikit-learn, scipy, seaborn
Already installed packages can be updated via the --upgrade flag:
C:\Users\user\AppData\...\...\...\Python\Python39\python -m pip install --upgrade
package_name
2. Using the Anaconda Python distribution and package manager
A highly recommended alternative Python distribution for scientific computing is Anaconda
by Continuum Analytics. Anaconda is a free-including for commercial use-enterprise-ready
Python distribution that bundles all the essential Python packages for data science, math, and
engineering in one user-friendly cross-platform distribution. The Anaconda installer can be
downloaded at https://www.anaconda.com/products/individual , and an Anaconda quick-start
guide is available at https://conda.io/docs/test-drive.html.
After successfully installing Anaconda, we can install new Python packages from the open
command prompt [windows + X /run] or Anaconda prompt to install additional Python
packages, using the following command:
C:/…/…/Anaconda3/scripts pip install package_name (open command prompt)
conda install package_name (Anaconda prompt)
package_name = matplotlib, yfinance, pandas, pandas-datareader, numpy, beautifulsoup4,
scikit-learn, scipy, seaborn
Already installed packages can be updated via the --upgrade flag:
C:/Anaconda3/scripts pip install package_name --upgrade (open command prompt)
conda upgrade package_name (Anaconda prompt)
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Web Resources:
https://www.python.org/doc/
http://wiki.python.org/moin/BeginnersGuide/
For HELP see:
https://stackoverflow.com/
Courses in Coursera: (https://www.coursera.org/)
• Python for Everybody
https://www.coursera.org/specializations/python
• Using Python to Access Web Data
https://www.coursera.org/learn/python-network-data
• Introduction to Portfolio Construction and Analysis with Python
https://www.coursera.org/learn/introduction-portfolio-construction-python
• Investment Management with Python and Machine Learning Specialization
https://www.coursera.org/specializations/investment-management-python-machine-
learning
• Fundamentals of Machine Learning in Finance
https://www.coursera.org/learn/fundamentals-machine-learning-in-finance
• Innovations in Investment Technology: Artificial Intelligence
https://www.coursera.org/learn/invest-tech
Courses in edX: (https://www.edx.org/)
• Introduction to Programming Using Python
https://www.edx.org/course/introduction-to-programming-using-python
• Introduction to Python: Absolute Beginner
https://www.edx.org/course/introduction-to-python-absolute-beginner-1
• Introduction to Python: Fundamentals
https://www.edx.org/course/introduction-to-python-fundamentals-1
• Python Data Structures
https://www.edx.org/course/python-data-structures
Courses in Udemy: (https://www.udemy.com/ )
• Python for Finance: Investment Fundamentals & Data Analytics
https://www.udemy.com/python-for-finance-investment-fundamentals-data-analytics/
• Python for Business and Finance
https://www.udemy.com/course/complete-python-for-business-and-finance-bootcamp/
• Python for Financial Analysis and Algorithmic Trading
https://www.udemy.com/course/python-for-finance-and-trading-algorithms/
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Courses in Codecademy: (https://www.codecademy.com/)
• Learn Python 3
https://www.codecademy.com/learn/learn-python-3
• Analyze financial data with Python
https://www.codecademy.com/learn/paths/finance-python
Courses in DataCamp: (https://www.datacamp.com/)
• Introduction to Python
https://www.datacamp.com/courses/intro-to-python-for-data-science
• Importing & Managing Financial Data in Python
https://www.datacamp.com/courses/importing-managing-financial-data-in-python
• Manipulating Time Series Data in Python
https://www.datacamp.com/courses/manipulating-time-series-data-in-python
• Introduction to Portfolio Analysis in Python
https://www.datacamp.com/courses/introduction-to-portfolio-analysis-in-
python?utm_medium=email&utm_source=customerio&utm_campaign=course_18408
• Machine Learning for Finance in Python
https://www.datacamp.com/courses/machine-learning-for-finance-in-python
Are there any books on Python?
Yes, there are many, and more are being published. See the python.org wiki at:
https://wiki.python.org/moin/PythonBooks for a list.
Books:
• Brooker, Phillip, (2019), Programming with Python for Social Scientists, SAGE
Publications.
• Dixon, Matthew F., Igor Halperin, Paul Bilokon, (2020), Machine Learning in Finance:
From Theory to Practice, 1st Edition, Springer.
• Hilpisch, Yves, (2015), Python for Finance, O’Reilly.
• Hull, John C., (2021), Machine Learning in Business: An Introduction to the World of
Data Science, 3rd Edition, Independently published.
• Lopez de Prado, Marcos, (2018), Advances in Financial Machine Learning, Wiley.
• Lopez de Prado, Marcos, (2020), Machine Learning for Asset Managers, Cambridge
University Press.
• Nagel, Stefan, (2021), Machine Learning in Asset Pricing, Princeton University Press.
• Weiming, James Ma, (2019), Mastering Python for Finance: Implement advanced state-of-
the-art financial statistical application using Python, 2nd Edition, Packt Publishing.
• Yuxing, Yan, (2017), Python for Finance: Apply Powerful Finance Models and
Quantitative Analysis, 2nd Edition, Packt Publishing.
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Example 1: (01 FinData_from_Yahoo)
#First, make sure to have available all necessary libraries:
import datetime as dt
import matplotlib.pyplot as plt
from matplotlib import style
import pandas as pd
import yfinance as yf
style.use('ggplot')
#Second, retrive the data from, say, Yahoo
start = dt.datetime(2016,1,2)
end = dt.datetime(2021,10,31)
df = yf.download("AAPL", start, end)
print (df.head())
print(df.head(10))
print(df.tail())
print(df.tail(10))
#Save that data in file
df.to_csv('AAPL.csv')
Example 2: (02 ReadData_from_csvFile_PlotData)
#First, make sure to have available all necessary libraries:
import datetime as dt
import matplotlib.pyplot as plt
from matplotlib import style
import pandas as pd
import yfinance as yf
style.use('ggplot')
#Read data from CSV file:
df = pd.read_csv('aapl.csv', parse_dates = True, index_col=0)
print(df.head())
#Plot data:
df.plot()
plt.show()
df['Adj Close'].plot()
plt.show()
print(df[['Open', 'High']].head())
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Example 3: (03 FinData_Firms_and_Indeces)
#First, make sure to have available all necessary modules:
import datetime as dt
import matplotlib.pyplot as plt
from matplotlib import style
import pandas as pd
import yfinance as yf
import numpy as np
style.use('ggplot')
#Second, retrive the data from, say, Yahoo
start = dt.datetime(2012,12,31)
end = dt.datetime(2021,11,7)
#The list contains the 5 symbols for the stocks;
#Google (GOOGL), Facebook (FB), Microsoft (MSFT), Apple (AAPL), IBM (IBM), and
#the symbols for the Dow Jones Industrial Average and the S&P500
symbols = ["GOOGL","FB","MSFT","AAPL","IBM","^DJI","^GSPC"]
#Only the closing values of each data set:
data = pd.DataFrame()
for sym in symbols:
data[sym] = yf.download(sym, start, end)['Close']
data = data.dropna()
print(data.head())
print(data.tail())
#plot data
data[['GOOGL','FB','MSFT','AAPL','IBM']].plot()
plt.show()
data[['FB','MSFT','AAPL','IBM']].plot()
plt.show()
#Save that data in file:
data.to_csv('DJI.csv')
Example 4: (04 Rolling Std (Volatility)
#First, make sure to have available all necessary modules:
import datetime as dt
import matplotlib.pyplot as plt
from matplotlib import style
import pandas as pd
import yfinance as yf
import numpy as np
style.use('ggplot')
#Second, retrive the data from, say, Yahoo:
start = dt.datetime(2002,12,31)
end = dt.datetime(2021,10,31)
df = yf.download("GOOGL", start, end)
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print(df.head())
print(df.tail())
#Calculate the log returns:
df['Log_Ret'] = np.log(df['Adj Close']/df['Adj Close'].shift(1))
print (df.head()['Log_Ret'])
print(df.tail()['Log_Ret'])
#Calculate the rolling standard deviation of the log returns (volatility):
df['Volatility'] = df['Log_Ret'].rolling(window=252).std()*np.sqrt(252)
print(df.head())
print(df.tail())
#Save that data in file:
df.to_csv('GOOGL.csv')
df[['Adj Close','Volatility']].plot(subplots=True, color='blue', figsize=(8,6))
plt.show()
