Quantitative investing

Quantitative investing represents an investing technique typically employed by the most sophisticated, technically advanced hedge funds. These firms employ fast computers to find predictable patterns within financial data. Some of the larger investment managers using quantitative investing include Renaissance Technologies' Medallion Fund,[1] AQR Capital, Winton Capital Management, D. E. Shaw & Co.,[2] Numeric Investors, Grantham, Mayo, Van Otterloo & Co. LLC (GMO), First Quadrant, Robeco.

Typically, quant investing is implemented by people who have spent time in the physics, math, computer science, or statistics disciplines. The condensed results of quantitative analyses, however, can be readily accessible to all far-from-quantitative investors, when presented in an intuitive framework.

The process consists of thorough examination of vast databases searching for repeating patterns—persistent occurrences of a phenomenon, correlations among liquid assets ("statistical arbitrage" or "pairs trading"), or price-movement patterns (trend following or mean reversion).

References

  1. ↑ Zuckerman, Gregory (2005-07-01). "Renaissance's Man: James Simons Does The Math on Fund". The Wall Street Journal.
  2. ↑ Kolman, Joe (1998). "Inside D. E. Shaw". Derivatives Strategy. Retrieved 22 June 2013.
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