---
title: Less Is More: Forecast Granularity, Estimation Error, and Portfolio Choice
url: https://www.ml-quant.com/papers/ssrn/7547959/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-10-02
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: SSRN 7547959
source_url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7547959
featured: 2026-10-02
citations: unknown
topic: Portfolio & Allocation
---


# Less Is More: Forecast Granularity, Estimation Error, and Portfolio Choice

Investors using machine-learning forecasts can achieve Sharpe ratios of 1.2 by adjusting the number of portfolio groups based on the forecast's information coefficient, beating standard decile sorts.

- Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7547959
- Identifier: SSRN 7547959
- Released: 2026-10-01
- First featured: Quant Letter No. 133 (2026-10-02): https://www.ml-quant.com/issues/2026-10-02/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Portfolio & Allocation
- Authors: Lukas Salcher, Sebastian Stöckl, Michael Hanke

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