Market anomaly

A market anomaly (or market inefficiency) is a price and/or rate of return distortion on a financial market that seems to contradict the efficient-market hypothesis.^[1][2]

The market anomaly usually relates to:

• Structural factors, such as unfair competition, lack of market transparency, regulatory actions, etc.
• Behavioral biases by economic agents (see behavioral economics)
• Calendar effects, such as the January effect.

There are anomalies in relation to the economic fundamentals of the equity, technical trading rules, and Economic Calendar events.

Anomalies could be fundamental,^[3] technical, or calendar related. Fundamental anomalies include value effect, small-cap effect (low P/E stocks and small cap companies do better than index on an average) and the low-volatility anomaly. Calendar anomalies involve patterns in stock returns from year to year or month to month, while technical anomalies include momentum effect.

References

External links

• ANOMALIES AND MARKET EFFICIENCY
• Financial Market Anomalies