This project investigates how investment behavior and asset allocation strategies shift across different phases of the economic cycle, with a particular focus on periods of economic downturn and uncertainty.
By combining macroeconomic indicators with financial market data, the project aims to provide data-driven insights into investor risk preferences and portfolio adjustments under chaning economic conditions.
Analyze how macroeconomic conditions influence investment behavior Identify shifts in asset allocation during economic downturns Quantify changes in investor risk preferences using statistical models Generate insights to support investment strategy evaluation and decision-making
Macroeconomic indicators (e.g., GDP growth, interest rates, inflation) Financial market data (e.g., asset returns, portfolio allocations) Public datasets (e.g., central bank / economic databases)
- Data Processing Cleaned and merged large-scale datasets using Python (Pandas) and SQL Handled missing values, standardized variables, and aligned time-series data
- Modeling Applied Ordinary Least Squares (OLS) regression using: Python (statsmodels) Machine Learning: Decision tree, Random Forest Modeled the relationship between macroeconomic indicators and investment allocation
- Statistical Analysis Conducted hypothesis testing and statistical inference Evaluated significance of key variables affecting investment decisions
- Economic Interpretation Interpreted results within a macroeconomic framework Linked empirical findings to economic cycles and market conditions
Investors demonstrate a significant shift toward low-risk assets during economic downturns Macroeconomic uncertainty is strongly associated with defensive portfolio reallocation Certain indicators (e.g., interest rates, volatility proxies) play a key role in predicting allocation changes
Provides evidence for risk-adjusted investment strategies under economic stress Supports understanding of market behavior during downturns Offers insights applicable to: Portfolio management Risk management Economic research