Learning Temporal Patterns in Financial Time Series: A Comparative Study of Quantum LSTM and Quantum Reservoir Computing
Abstract
This study explores quantum and classical hybrid architectures for financial time-series fore casting, focusing on Quantum Long Short-Term Memory (QLSTM) networks and Quantum Reservoir Computing (QRC), using univariate and multivariate lag structures on real financial data. We assess how lag embeddings affect predictive accuracy and robustness. Data are en coded into quantum states via amplitude encoding, enabling efficient representation of normalized lagged observations under realistic qubit constraints. The recurrent dynamics of QLSTM and the reservoir of QRC are implemented as parameterized quantum circuits, while classical optimizers train the readout and, where applicable, variational circuit parameters. We benchmark quantum models against classical LSTM and reservoir computing using common error like metrics. Our results show that, with suitable lag selection and amplitude encoding, quantum-enhanced archi tectures match classical baselines in univariate settings and can modestly outperform them in multivariate regimes with correlated inputs, where expressive encodings are most beneficial.
Related
- Liouvillian Response for Temporal Information in Quantum Reservoir Computing
- When Does Interference Help Learning? Kernel Geometry as a Pre-Experimental Test for Photonic Reservoir Computing
- Reservoir computing generalized: Exploiting complex dynamics via time-invariant transformation
- Nonlinear pluggable optics: Digital signal processing-free Intensity Modulated Direct Detection links using analog photonic Next Generation Reservoir Computing
- Basin Geometry and Reliable Recall of Dynamical Memories in Reservoir Computing
BibTeX
@misc{maheshwari2026learning,
title = {{Learning Temporal Patterns in Financial Time Series: A Comparative Study of Quantum LSTM and Quantum Reservoir Computing}},
author = {Danyal Maheshwari and Gerhard Hellstern and Martin Zaefferer and Martin Braun and Tanja Döhler},
howpublished = {arXiv},
year = {2026},
month = sep,
doi = {10.48550/arxiv.2605.02656},
eprint = {2605.02656},
archivePrefix = {arXiv},
url = {https://arxiv.org/abs/2605.02656},
note = {CC BY 4.0},
}
RIS
TY - UNPB
TI - Learning Temporal Patterns in Financial Time Series: A Comparative Study of Quantum LSTM and Quantum Reservoir Computing
AU - Danyal Maheshwari
AU - Gerhard Hellstern
AU - Martin Zaefferer
AU - Martin Braun
AU - Tanja Döhler
PY - 2026
DA - 2026/09/15
PB - arXiv
DO - 10.48550/arxiv.2605.02656
UR - https://arxiv.org/abs/2605.02656
AB - This study explores quantum and classical hybrid architectures for financial time-series fore casting, focusing on Quantum Long Short-Term Memory (QLSTM) networks and Quantum Reservoir Computing (QRC), using univariate and multivariate lag structures on real financial data. We assess how lag embeddings affect predictive accuracy and robustness. Data are en coded into quantum states via amplitude encoding, enabling efficient representation of normalized lagged observations under realistic qubit constraints. The recurrent dynamics of QLSTM and the reservoir of QRC are implemented as parameterized quantum circuits, while classical optimizers train the readout and, where applicable, variational circuit parameters. We benchmark quantum models against classical LSTM and reservoir computing using common error like metrics. Our results show that, with suitable lag selection and amplitude encoding, quantum-enhanced archi tectures match classical baselines in univariate settings and can modestly outperform them in multivariate regimes with correlated inputs, where expressive encodings are most beneficial.
ER -