The 1,023 synthetic files play a critical role in model selection. They are essential for conducting a structured tournament selection process, which is a powerful method for identifying the strongest model among various promising candidates. Instead of relying on a single test, tournament selection allows for multiple iterations, ensuring a robust evaluation of different strategies under varied conditions.

By structuring the process as a tournament, weaker strategies are systematically eliminated, leaving only the top-performing ones. The 1,023 synthetic files are based on a single-elimination (knockout) tournament, which is fast and efficient, consisting of 10 rounds. This increases the likelihood of selecting the most effective strategy.

File Count Per Round

Each match consists of two competitors (one file per match). Since each round eliminates half of the competitors, the number of files used in each round follows this pattern:

Round 1: 1,024 competitors (512 files) → 512 advance

Round 2: 512 competitors (256 files) → 256 advance

Round 3: 256 competitors (128 files) → 128 advance

Round 4: 128 competitors (64 files) → 64 advance

Round 5: 64 competitors (32 files) → 32 advance

Round 6: 32 competitors (16 files) → 16 advance

Round 7: 16 competitors (8 files) → 8 advance

Round 8: 8 competitors (4 files) → 4 advance

Round 9: 4 competitors (2 files) → 2 advance

Round 10 (Final): 2 competitors (1 file) → 1 winner

This approach ensures that the final model is not just a product of chance as it has consistently outperformed other strong competing models. By leveraging tournament selection, you can refine asset allocation strategies with greater confidence, leading to stronger, more reliable decision-making.

For more details, please subscribe to receive our whitepaper.