Statistical Learning vs Machine Learning: Clear Differences

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The video provides a comprehensive overview of the fundamental difference between statistical learning and machine learning from the perspective of an algorithmic trader. It emphasizes that statistical learning is primarily focused on inference and understanding relationships in order to determine why things happen, using metrics such as p-values. In contrast, machine learning is focused on accurate prediction to find out what will happen next, and its success is measured by performance metrics on test data. The video goes on to explain that the best trading strategies are created by combining both approaches, where the predictive power of machine learning is combined with statistical robustness and overfitting control. In conclusion, although both approaches are prone to errors, such as overfitting in ML and model specification errors in statistics, they are essential for successful quantitative trading.