How we do it
We seek to populate our portfolio with extraordinary valuations. Mathematically and systematically.
Step 1
Data, Universe Definition, Alpha Discovery. Quants are data-driven and data-informed investors. All quant investing starts with data. You are mining for gold; first you need to decide where to start mining.
Step 2
Alpha Combination and Portfolio Construction. An alpha is an expression, applied to the cross-section of your universe of stocks, which returns a vector of real numbers where these values are predictive of the relative magnitude of future returns. It today’s markets, rarely is any single alpha significant enough to be the sole basis of an investment strategy. A successful strategy usually includes many individual alphas
Step 3
The output of the portfolio construction stage is an ideal portfolio and a trade list to transition the current portfolio to the ideal portfolio. Trading is the stage of effecting trades in the market.
